The SEC has taken its first enforcement action against a cryptocurrency exchange, settling a case with the founder of EtherDelta, who was accused of operating an unregistered securities exchange. The action could open the door for further enforcement against crypto exchanges, which until now have enjoyed relative carte blanche to list tokens that may be considered securities.
EtherDelta is a decentralized exchange, a platform that connects buyers and sellers without acting as a third party in transactions (think Craigslist, but for buying and selling crypto). Some assumed that since these exchanges weren’t a party in the transactions, they could skirt legal culpability. Still, it is unclear what impact the settlement will have, given that EtherDelta was sold to non-U.S. buyers in November 2017 and is still operational.