In 2024, the United States Securities and Exchange Commission (SEC) significantly increased its enforcement against crypto firms, imposing fines totaling around $4.7 billion. These actions by the SEC coincided with rising financial losses from crypto fraud.
SEC's Record-Breaking Year
In 2024, the United States Securities and Exchange Commission (SEC) imposed enforcement actions totaling around $4.7 billion against crypto firms and their executives. This marks an over 3000% increase compared to 2023. The rise in enforcement actions was largely driven by the SEC's record-setting $4.47 billion settlement with Terraform Labs and its former CEO, Do Kwon, in June. This is the SEC’s largest enforcement action to date and contributed a significant portion to the regulator's total fines for the year. In 2024, the SEC initiated 11 enforcement actions, which is 19 fewer than the previous year but with a much larger financial impact.
Surge in Crypto Fraud Losses
In 2023, Americans lost around $5.6 billion to cryptocurrency fraud, a 45% increase from the previous year. According to the FBI's Internet Crime Complaint Center (IC3) report, crypto-related complaints made up 10% of the total complaints received but accounted for nearly 50% of the total financial losses. The most frequent victims were individuals over the age of 60, who lost almost $1.6 billion. 71% of crypto fraud was tied to investment schemes, while 10% involved call center fraud and impersonation of government officials. Fraud schemes include confidence tricks where criminals exploit trust and anonymity. The use of crypto ATMs also represents a serious risk: in 2023, 5,500 cases of fraud involving these machines resulted in losses of over $189 million.
AI-Powered Deepfake Threats
In 2024, the number of AI-powered deepfake scams targeting crypto holders increased. On September 4, software firm Gen Digital reported a rise in such scams during the second quarter of 2024. The group 'CryptoCore' has already scammed over $5 million in crypto using these techniques. In September, YouTube was flooded with live streams using deepfake videos of Apple CEO Tim Cook promoting crypto scams during Apple's official iPhone 16 launch. The fake videos urged viewers to send Bitcoin, Ethereum, Tether, or Dogecoin to a specified 'contribution address,' falsely promising to double the amount.
The increase in SEC enforcement against crypto firms and the rise in crypto fraud highlight the importance of enhanced security and vigilance in this sector. New types of threats like AI-powered deepfakes will continue to pose risks to digital asset holders.
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