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ARTICLE · 14 NOVEMBER 2018

Blockchain Legal Resource: Sec Brings First Enforcement Action Against Unregistered Token Exchange

Hunton Andrews Kurth LLP
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On November 8, 2018, the SEC announced settled charges against an unlicensed digital token exchange (the "Platform").

United StatesTechnology
Scott H. Kimpel
Scott H. Kimpel
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On November 8, 2018, the SEC announced settled charges against an unlicensed digital token exchange (the "Platform"). It represents the SEC's first enforcement action based on findings that such a platform operated as an unregistered national securities exchange. This action follows first-of-their kind enforcement actions that the SEC brought in September against an unregistered broker-dealer and an unregistered investment company that each transacted in digital securities.

According to the SEC's order, the Platform provided online secondary market trading of ERC20 tokens, a type of blockchain-based token commonly issued in ICOs. The SEC found that almost all of the orders placed through the Platform were traded after the SEC issued its 2017 DAO Report, which concluded that certain digital assets were securities and that platforms that offered trading of these digital asset securities would be subject to the SEC's requirement that exchanges register or operate

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