SEC Increases Crypto Penalties to $4.7 Billion in 2024

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by Giorgi Kostiuk

2 years ago

Made with AI

  1. SEC Boosts Enforcement Scale
  2. High-Profile Cases and Strategic Shifts
  3. Historical Penalty Dynamics


    4. The Securities and Exchange Commission (SEC) has secured $4.7 billion in crypto-related enforcement actions in 2024, marking a staggering 3,018% increase from last year, according to Social Capital Markets.

    SEC Boosts Enforcement Scale

    This surge was largely driven by the agency’s record-breaking $4.47 billion settlement with Terraform Labs and its former CEO, Do Kwon, in June. That was the SEC’s “largest enforcement action to date,” according to a Sept. 9 report from Social Capital Markets. The total amount comprises forfeiture, civil penalties, settlement, disgorgement, and pre-judgment interest.

    High-Profile Cases and Strategic Shifts

    Although the collective dollar amount of the regulator’s enforcement actions has spiked 3,018% in the last year, there has been a drop in the number of cases the SEC pursued. Only 11 enforcement actions were initiated against crypto firms by the SEC this year, which is 19 fewer actions compared to last year. This trend indicates a strategic shift by the SEC toward fewer but larger fines, with a focus on making high-impact enforcement actions that set precedents for the entire industry.

    Historical Penalty Dynamics

    Following the settlement with Terraform Labs and Do Kwon, the next biggest fine was issued to the messaging network Telegram in 2019. In this case, Telegram was slapped with a $1.24 billion action, which comprised $18.5 million in civil penalties and $1.2 billion in disgorgement paid back to investors. In the four years after Telegram’s case, fines from the regulator have hovered between $5 million and $35.2 million before Terraform Labs pushed the average substantially higher. During this period, 46% of the fines imposed have been below $1 million. Meanwhile, 30% of the fines have been between $1 million and $10 million.

    The SEC asked for $2B, and the Court reduced their demand by ~94%, recognizing that they had overplayed their hand. We respect the Court’s decision and have clarity to continue growing our company.Brad Garlinghouse

    The sharp increase in crypto penalties from the SEC indicates heightened regulatory scrutiny over the cryptocurrency industry and a move toward establishing more stringent governance and transparency standards.

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