The SEC – Billionaire365

The US SEC Fined EtherDelta, An Ethereum (ETH) and ERC20 Exchange, For Operating Without A License

The US Securities and Exchange Commission (SEC) sanctioned Zachary Coburn, founder of Ethereum’s decentralized Ethereum (ETH) and ETH tokens exchange platform, EtherDelta, with $388,000, alleging that the startup operated as an unauthorized cryptocurrency exchange. The regulator said Thursday, November 8th, that EtherDelta “was required to register with the SEC or qualify for an exemption.”

In the press release, the SEC said this is the first action it has taken “based on the findings that the platform operated as a national means of exchanging unlicensed securities.” Also, the officials said EtherDelta provided a market for buyers and sellers to exchange tokens “using an order book, an order display website, and a smart contract based on Ethereum (ETH).”

The US regulators noted that, over an 18-month period, EtherDelta crypto exchange’s users executed more than 3.6 million orders for ERC20 tokens, “including tokens that are securities under federal securities laws.”

The US Securities and Exchange Commission (SEC) Fined EtherDelta Ethereum (ETH) Crypto Exchange For Operating Without A License

The US Securities and Exchange Commission’s decision marks a precedent that could impact the creation and development of decentralized crypto exchange projects. Stephanie Avakian, co-director of the SEC’s Enforcement Division, noted that “EtherDelta had both the user interface and the underlying functionality of a national online stock exchange and was required to register with the SEC or qualify for an exemption.”

Without admitting or denying the facts, Zachary Coburn agreed to pay $388,000 in penalties broken down into $300,000 in profit returns, $13,000 in interest, plus a fine of $75,000.

EtherDelta attracted media attention back in December 2017 when its platform was hacked, putting users’ information and funds at risk. The system is used to exchange Ethereum (ETH), the Ethereum blockchain’s native cryptocurrency, as well as other tokens created on this network, known as the ERC20 tokens, among others.

Anna Galvez

The US Congress Demanded The SEC To Clarify The Cryptocurrency Regulations Situation

On September 28th, a group of US congressmen sent a letter to the president of the Securities and Exchange Commission (SEC), Jay Clayton, asking him to clarify the regulatory framework surrounding cryptocurrency. The message, presented by more than a dozen congressmen, is a step for the securities laws to be modified to include cryptos.

The document was sent a few days after a meeting between representatives of the cryptocurrency ecosystem, congressmen and traditional market investors. Congressmen highlighted the lack of clarity regarding the SEC decisional process regarding whether a crypto token is a security or not.

Additionally, in the letter, they asked the SEC to clarify whether a token could be analyzed separately from the purchase contract, which in turn could become an offer of value. If so, they question whether the resulting token would be treated as a value.

The SEC keeps alive the dilemma surrounding the crypto tokens issued via ICOs

The SEC has cataloged Bitcoin (BTC) and Ethereum (ETH) as commodities, so their regulation is not related to the SEC, but to the CFTC. In the case of other cryptos, such as tokens, the SEC has indicated so far that it will use the Howey test to determine whether they are values or not. But this instrument does not cover the variety of characteristics crypto tokens sum up.

The US Congress also questioned the SEC chief if he agrees with the past statements of the director of corporate finance, William Hinman, who pointed out that the cryptos coming from Initial Coin Offerings (ICOs) should be regulated as securities, a measure that until now is not contemplated by the cryptocurrency regulations.

Also, on September 25th, a meeting was held in Washington DC between Wall Street investors, US congressmen and representatives of the cryptocurrency ecosystem, in which they discussed aspects to prepare a draft law for more explicit cryptocurrency regulations. On that occasion, cryptocurrency companies stressed that, without a clear regulatory framework, the US would lose its advantage in this industry.

Anna Galvez