Did the SEC just fire a warning shot across the bow of crypto?
In news out late yesterday, the SEC revealed that they had charged the founder and creator of EtherDelta (Zachary Coburn) with operating an unlicensed securities exchange.
The release can be found here:
If you are not familiar, EtherDelta has operated as a quasi decentralized crypto exchange on the Ether network for the last couple years.
This is very interesting for several reasons.
For one, the SEC charged the developer, not the exchange itself as the exchange wasn't really one centralized entity.
This sets an interesting and dangerous precedent for developers developing things on crypto platforms going forward.
They could be held liable if something the build ends up being used to violate securities laws...
Perhaps they will all go anonymous from here on out?!
Secondly, it begs the question as to what exactly the SEC considers a security?
Most had thought we were getting past this opaque regulatory stage and the SEC was going to let some of the older coins slide, while focusing mainly on the newer coins in regards to what is a security and what is not.
However, this latest enforcement action opens things up again to just what exactly the SEC might consider a security.
Which is a major reason why the crypto markets have been selling off ever since yesterday afternoon when this news broke.
(Source: https://coinsutra.com/security-tokens-vs-utility-tokens/)
What will this mean for crypto exchanges going forward?
As far as I know very few have the proper licensing to be trading securities, will the SEC go after them?
Will the SEC be going after ones that are not registered in the US but still have US clients?
Lots of unanswered questions after this latest enforcement action...
This just goes to show why one of the biggest risks to the crypto markets continues to be a lack of clarity on where regulators stand on several important issues.
My hope is that they try to work with ones that may be unknowingly violating laws instead of coming down hard on them.
Hopefully this doesn't interfere with our setup for a possible Santa Claus rally to end the year.
Stay informed my friends.
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