Home / Crypto Currency / EtherDelta Founder Pays SEC $385,000 in Damages for Running an Unlicensed Securities Exchange

EtherDelta Founder Pays SEC $385,000 in Damages for Running an Unlicensed Securities Exchange

It would appear more trouble may be brewing for the cryptocurrency industry. Although there is still no official industry regulation in the United States, dark clouds are gathering over EtherDelta. Zachary Coburn, the founder of the platform, is charged by the SEC for running an unregistered securities exchange.

ERC20 Tokens Are Always Risky

No one should be really surprised to learn the SEC doesn’t look favorable upon platforms trading ERC20 tokens. While the institution has deemed Ethereum to not be a security, after all, the same doesn’t automatically apply for tokens issued on top of this blockchain. In fact, the opposite may come true for some specific offerings.

Over the past few months, the SEC has actively cracked down on ICOs which would potentially violate securities laws. Unsurprisingly, most of those cases involve ERC20 tokens. Most of those tokens are effectively trading on EtherDelta, primarily because users can create their own trading pairs as they see fit without too much intervention from the site owner.

For Zachary Coburn, who effectively founded the platform, things are not cut-and-dry by any means. In the eyes of SEC officials, he has engaged in operating an unregistered securities exchange. That is quite a big problem for Coburn and the EtherDelta platform itself. The service is an actual exchange for trading ERC20 tokens, which does not impose any limitations based on the nature of the token in question.

Although one could argue EtherDelta is nothing more than a smart contract with a convenient user interface, the SEC sees things differently. More specifically, the code of the contract in question is designed by Coburn, and he takes responsibility for the actions performed by his code as such. Moreover, the code executes paired orders, which makes him indirectly responsible for every single trade taking place through this contract.

The SEC explains their scrutiny as follows:

“Almost all of the orders placed through EtherDelta’s platform were traded after the Commission issued its 2017 DAO Report, which concluded that certain digital assets, such as DAO tokens, were securities and that platforms that offered trading of these digital asset securities would be subject to the SEC’s requirement that exchanges register or operate pursuant to an exemption.”

For the time being, it seems Coburn will not face any jail time or anything like that. Instead, he settled the dispute by paying over $385,000 in fees, penalties, and so forth. It does not appear EtherDelta will be shut down or modified in any way either, which is something to be happy about as an ERC20 user.

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Bitcoin Cash Price Gets Skewed due to Exchange Trickery

A lot of confusing action is taking place where the Bitcoin Cash price is concerned. Although its actual decline in value is quite obvious for everyone to see, the real price of BCH is not necessarily what people can see on Coinmarketcap. This is primarily because numerous exchanges treat BCHABC as Bitcoin Cash already despite nothing being decided in terms of which chain will be the longest. Bitcoin Cash Value Fluctuates Heavily Depending on where traders look at, the price of Bitcoin Cash will be either close to the $400 level or down to $250-ish. That is quite a large gap between prices, yet one that is also very easy to explain. Bitcoin Cash, as people knew it before the fork, no longer exists. Most professional exchanges have also retired this price ticker, for the time being. As the hash war rages on, there are still a lot of unknown factors waiting to be addressed. Despite this ongoing kerfuffle, there is a net 5.76% decrease in the Bitcoin Cash price, and a 5.4% decline over Bitcoin. More specifically, that is what CoinMarketCap reports at this time, although this is not necessarily the case whatsoever. In fact, some exchanges are clearly jumping the gun by labeling BCHABC as BCH and thus dragging the Bitcoin Cash price down a bit more. Exchanges currently engaging in this activity include Bittrex and Coinex, neither of which plays a big role of importance when it comes to trading. However, based on the current value of BCH on Bitfinex and Gate.io, it seems a similar incident is taking place. One also has to keep in mind Bitcoin Cash was getting battered ahead of the network split as well. Most exchanges have halted trading of BCH indefinitely, primarily because the currency no longer exists. It is evident either BCHABC or BCHSV will take over that name in the future, but nothing has been decided at this point. As such, any trading referring to just “Bitcoin Cash” or “BCH” should be avoided, as most users can never be sure which currency is effectively being traded under this name. All of this skews the picture pertaining to Bitcoin Cash altogether. Coinmarketcap reports there is still $392m in trading volume for BCH, even though that is virtually impossible right now. With so many exchanges freezing deposits and withdrawals, it is evident actual BCH trading is no longer possible whatsoever. Virtually all platforms have deposits of BCHSV and BCHABC frozen as well, which only makes this market trend more confusing. It is safe to say the entire network split has been a bit of a mess first and foremost. In the case of Bitcoin Cash itself, that name will – under the current circumstances- not be used across exchanges for much longer. Instead, the two separate camps need to be treated as such first and foremost. Until things settle down – with might not necessarily happen anytime soon – the Bitcoin Cash price itself is pretty much irrelevant for most traders and speculators. Disclaimer: This is not trading or investment advice. The above article is for entertainment and education purposes only. Please do your own research before purchasing or investing into any cryptocurrency. The post Bitcoin Cash Price Gets Skewed due to Exchange Trickery appeared first on NullTX.

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