SEC Prosecutes Zachary Coburn Founder of EtherDelta - A threat to Centralization
Zachary Coburn founder of Etherdelta has been prosecuted by the US financial regulatory authority the SEC for running an unregistered securities exchange. Coburn has agreed to pay $300,000 in disgorgement (repayment of illegal gains) in order to prevent an aggressive punitive prosecution. He also paid another $88,000 in the form of penalties and interest. This is all despite the fact that Etherdelta was just another ERC20 contract on the Ethereum chain, is decentralized and Coburn left Etherdelta in late 2017. Add to that the case is continuing and an active prosecution could still yet occur.
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,
Stephanie Avakian, Co-Director of the SEC's Enforcement Division.
- This has serious implications for crypto -
- Decentralization do not protect entities from prosecution by individual hostile states
- Decentralization does not protect individuals, or potentially even users, from prosecution from individual hostile states.
- The door is now open for other hostile states to prosecute Coburn.
- Decentralization potentially allows every hostile state to attack that entity and persons operating within it. Instead of being a merit decentralization becomes a liability.
If the SEC starts going after more decentralized exchanges, and it is suggested that they will, then no decentralized exchange is safe and the model will be dead. The only option will be to do what non-decentralised exchanges like Bittrex is doing and separate US accounts from others. If other states start behaving aggressively it is going to get more and more complicated with all exchanges insisting on KYC. Idex has recently introduced KYC and that has alienated itself against crypto uses and caused a huge backlash. Even so it is still open to being prosecuted for historical trading.
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it's not surprising that governments and authority are doing everything in their power to prevent mass crypto adoption. decentralization will put most of them out of jobs and out of power. ironically it's the chinese civilians that are embracing decentralization because a lot of them hate the government so much. in many other countries (including my own) i see people supporting this type of tyranny.
it's shameful, but eventually they'll give in (those mindless government officials and their supporters). democracy, decentralization, market principles are too good to pass. those same sheeps will get onboard as soon as some influencer starts talking about freedom and crypto :)
Yeah it is a threat to them however they are having a good fightback. Things like Polymath and Circle want to keep the money in the hands of those with the money.
I think the change will happen from the bottom up. Places like Argentina and Veneuela are seeing their currencies crushed with the rate of inflation going above 50%. This has meant that cryptos start to get a foothold. The governments will eventually give up on their currencies as it becomes a waste of time trying to control it and accept one or more cryptos as their national currencies. In the past Zimbabwe gave up in its currency and just started using the US dollar so it is not a big step to using crypto. Over time other countries will see a run on their national currencies and they will also start using crypto. It's pretty much a given.
This will of course mean that these economies will be linked .........which will make for an interesting proposition on what the definition of a country will be.
i think it's gonna happen quicker than we think. once people start exchanging goods/services with crypto it's gameover. at some point, the vast majority will simply move their assets outside government control and refuse to pay taxes. governments will be reduced in size because most of current administrative bullshit and trade laws and tax systems etc will be redundant (at least half of government except military, pd, fd). people will have control over how much tax government really deserves. it's almost too good to be true, but so was the printing press and voting rights. it's coming. the only question is when :)