EtherDelta Founder Settles Charges With SEC, Agrees to Pay Penalty

SEC settles all charges against the founder of EtherDelta, Zachary Coburn. The founder has agreed to pay the sum of $300,000 in disgorgement along with $13,000 in prejudgment interest with a $75,000 penalty.

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The United States SEC announced that it has settled it’s charges against founder of digital token trading platform, Zachary Coburn. This represents the SEC’s initial enforcement action which is based on reports that a digital token trading platform was operating as an unregistered national securities exchange.

The order from SEC

The company, EtherDelta, is a online platform that promotes secondary market trading of ERC20 tokens. This is a type of blockchain based token that is issued mainly in initial coin offerings.

The order revealed that Coburn allowed the platform to run as an unregistered national securities exchange.

The online platform offered its users a marketplace for both sellers and buyers for digital asset securities. It used an order book, a smart contract on the blockchain of Ethereum and a website that displayed the orders.

Its smart contract was also coded to validate order messages, confirm terms as well as conditions of the orders. It also executed paired orders while directing the distributed ledger to be updated in order to reflect a trade.

Booming business for EtherDelta

For about eighteen months, users of EtherDelta platform executed up to 3.6 million orders for ERC20 tokens. This number also included tokens that are considered as securities under the current federal security laws.

A lot of the orders placed through the platform were traded after SEC issued a report in 2017. The DAO report concluded that some digital tokens like DAO tokens were securities. Platforms that offered the trading of these digital asset securities would have to follow SEC’s requirements that the platforms operate pursuant to an exemption or register.

EtherDelta provided trading of different digital asset securities and didn’t register as an exchange or run on an exemption.

Coburn didn’t admit or deny the findings. However, he consented to the order and has agreed to pay the fine of $300,000 in disgorgement with another sum of $13,000 in prejudgment interest. The penalty fee is $75,000.

The US authorities announced this settlement to step up all efforts to end cryptocurrency fraud. A few months ago, the North American Securities Administrators Association (NASAA) reported that more than 200 active investigations of initial coin offerings as well as crypto related investment products were underway by the regulators in Canada and the United States. This is part of a crypto sweep effort.

Since the campaign was launched in May this year, the number of similar actions was 35.

Ethereum price analysis

Presently, Ethereum is trading at $215.58. The second largest cryptocurrency is trading in correction and the price reached its peak of $223.00. At this level, it started correcting. Presently, there is a bull trend line with strong support at the $216.00 level. It is possible that the coin’s value may drop to around $213.00 or $212.00 until new buyers come into the scene.

In the short term, we can expect more development of the downward correction. If the attitude among market participants remains positive, it is likely that the price will refresh highs after testing support. It may reach $225.00 and even go higher to around $231.00.

Canceling the growth option will be the support zone’s breakdown with the goal at $205.95. Here, we can expect a drop to $200.00.


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