I am no libertarian, but this feels thoroughly unfair on a human level. EtherDelta was a noble pursuit in my book - it was useful, entrepreneurial and did not exploit anybody.
That being said, this is a classic example of the law failing to keep pace with technology. Up until a few years ago it was a given that exchanges required a neutral third party to facilitate transactions and that, in the interest of fairness and full disclosure, those market makers needed to be registered and regulated. The law simply does not contemplate a self-regulated exchange governed by smart contracts and a decentralized ledger.
U.S. regulators also tend to focus on compliance with black-letter law without giving much credence to compliance with the spirit of the law. In my opinion, this all-or-nothing approach stymies innovation because regulators and innovators become adversaries when they could and should be allies.
if it quacks like a duck, looks like a duck, it's probably one in their eyes.
Also, I'm not talking about if it's illegal or not, the point that I can't get over is that the ED guy didn't scam or hurt anyone. It was an honest, transparent, open source project.
Exchanges that trade securities must also be registered.
You can trade ICOs on an exchange as long as both are registered according to their respective laws...