U.S. Securities and Exchange Commission (SEC) announced on Thursday that it settled charges against the founder of a digital token trading platform over running an unregistered exchange.
"This is the SEC's first enforcement action based on findings that such a platform operated as an unregistered national securities exchange," said the SEC.
Zachary Coburn, founder of an online digital token trading platform EtherDelta, made the platform to operate as an unregistered national securities exchange unlawfully, said SEC.
EtherDelta is an online digital token trading platform for secondary market trading of ERC20 tokens, which is a type of blockchain-based token, according to the SEC.
EtherDelta's users executed more than 3.6 million orders for ERC20 tokens over 18 months, which includes tokens that are securities according to the federal securities laws, said the SEC.
While certain digital assets were treated as securities by the SEC, trading platforms for these digital asset securities needs to register with the SEC or operate pursuant to an exemption.
"EtherDelta had both the user interface and underlying functionality of an online national securities exchange and was required to register with the SEC or qualify for an exemption," said Stephanie Avakian, co-director of the SEC's Enforcement Division.
However, the SEC said that EtherDelta failed to register as an exchange or operate pursuant to an exemption.
Although Coburn did not say anything about the SEC's findings, he consented to the SEC's order and agreed to pay 300,000 U.S. dollars in disgorgement plus 13,000 dollars in prejudgment interest along with a 75,000 dollars penalty, SEC said.