Robert Cohen, The Cyber Security Chief Of The SEC Makes Sound Warning To Cryptocurrency Exchanges
Due to the increasing number of cryptocurrency-related scams, the Securities and Exchange Commission in the United States has been keeping a Close eye on the industry for the purpose of protecting investors. The reach of the SEC in the United States just got to a whole new level after an announcement was made yesterday.
A while ago, the SEC announced that it was building a case against an Ethereum based cryptocurrency exchange for the first time. This case is being championed by Robert Cohen, The head of SEC’s cyber unit. Speaking exclusively to Forbes, Cohen said that creating exchanges with blockchain doesn’t eliminate the responsibilities of the creator. This warning is timely as decentralized exchanges are being launched with relative ease day by day. In Cohen’s words:
“We are not focused on how you label the technology. We are focused on its function and what you’re trying to achieve with this technology. We don’t care if it is dubbed decentralized or smart contract based, what matters is that it is an exchange”.
What Are Decentralized Exchanges?
Decentralized exchanges are exchanges that are run by a self-executing code and not by individuals. Rather than connecting buyers with sellers, these exchanges don’t act as intermediaries. They use smart contracts to connect people directly. Even if these exchanges are based on self-executing codes, Cohen emphasized that the individuals who create these codes are still responsible for them. While the currently battle the SEC is fighting is with EtherDelta, Cohen used this as an opportunity to warn the creators of decentralized exchanges.
Cohen reassures the public that the SEC is working hard to ensure that exchanges within the United States are compliant. However, he did not explain how they intend to handle decentralized exchanges that have anonymous creators. The intentions of the SEC are pure but the fact remains that the nature of exchanges based on blockchain technology make them practically impossible to shut down. When it comes to centralized servers, access can easily be revoked but the case isn’t the same for decentralized exchanges which are becoming increasingly popular. The SEC may need to develop a new means of enforcement to keep order and protect investors.