On November 8, 2018, the SEC issued an order instituting cease-and-desist proceedings in its first-ever enforcement action against a digital asset trading platform. The platform, EtherDelta, based in Washington, D.C., is an online platform for secondary market trading of ERC20 tokens, a type of blockchain-based token commonly issued in initial coin offerings (ICOs). The order found that EtherDelta was operating as an unregistered national securities exchange.

EtherDelta provided a marketplace for bringing together buyers and sellers for digital asset securities through the combined use of:

The enforcement action comes after the SEC's DAO Report issued on July 25, 2017, which "advised that a platform that offers trading of digital assets that are securities and operates as an 'exchange,' as defined by the federal securities laws, must register with the Commission as a national securities exchange or be exempt from registration."

From the date of EtherDelta's launch, July 12, 2016, to December 15, 2017, more than 3.6 million buy and sell orders in ERC20 digital tokens that included securities as defined by Section 3(a)(1) of the Exchange Act were traded on EtherDelta, of which approximately 92%, or 3.3 million, were traded during the period following the DAO Report.

The exchange's founder agreed to the SEC's cease-and-desist order without admitting or denying the findings against him, and agreed to pay:

For more information on recent cryptocurrency enforcement actions, see Legal Updates, SEC Takes First-Ever Cryptocurrency Enforcement Action Against Digital Asset Fund Manager and State Regulators Launch Sweep of ICOs and Cryptocurrencies.