Digital Token Trading Platform Founder Settles Charges for Operating Unregistered Exchange
Commentary by Steven Lofchie and Steven Lofchie
The SEC settled its first enforcement action against the founder of digital token trading platform EtherDelta for operating an unregistered national securities exchange. The platform enabled users to conduct secondary market transactions in certain blockchain tokens commonly issued in Initial Coin Offerings. The platform operated a website that enabled users to view orders in the order book, and used a smart contract to validate and execute paired orders.
The founder of the platform agreed to pay $300,000 in disgorgement plus $13,000 in prejudgment interest and a $75,000 penalty.
Commentary
Once it is established that a particular token in a security, the SEC and other regulators have quite a number of potential charges that they may bring against market intermediaries selling or trading or facilitating such activities in the token.
Commentary
Once it is established that a particular token in a security, the SEC and other regulators have quite a number of potential charges that they may bring against market intermediaries selling or trading or facilitating such activities in the token.