bitseven.com - Cryptocurrency exchanges, be warned. There’s no out-innovating the regulatory reach of the U.S. Securities and Exchange Commission.
Clarifying an announcement yesterday that the SEC is in the middle of its first ever case against a cryptocurrency exchange running on the ethereum blockchain, the chief of the SEC’s newly created cyber unit, Robert Cohn, exclusively told Forbes that using any blockchain to create an exchange without central operations doesn’t remove the original creator's responsibility.
As similar decentralized exchanges are being launched with increasing ease, and frequency, the warning shows how serious the SEC is about taming the cryptocurrency Wild West, and the semantics used to bolster it.
“The focus is not on the label you put on something or the technology you’re using,” says Cohen. “The focus is on the function, and what the platform is doing. Whether it’s decentralized or not, whether it’s on a smart contract or not, what matters is it’s an exchange.”
While traditional, centralized exchanges like Coinbase, or even Nasdaq, are run by individuals, this new breed of decentralized exchanges runs on self-executing code. Instead of serving as a middleman connecting buyers and sellers, these decentralized exchanges connect people directly using the code, also known as a smart contract.
But according to Cohen, the individuals behind that code remain responsible. It's notable, that the SEC's charges yesterday were not against the exchange, but the individual, Zachary Coburn, founder of the unlicensed decentralized EtherDelta token exchange. The exchange, which is still operational in spite of the SEC describing Coburn as being cooperative, has already helped users execute 3.6 million orders and took it's most recent order at 3:07 pm ET on Friday, November 9.
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