The US Securities and Exchange Commission (SEC) has taken a tougher stance against crypto firms in 2024. More specifically, the regulator imposed nearly $4.7 billion in enforcement actions against crypto companies, a 3,018% increase from 2023.
The fines included forfeitures, disgorgement, civil penalties, settlements, and prejudgment interest, calculated from the time the SEC initiated each case.
The surge is largely attributed to the SEC’s $4.47 billion settlement with Terraform Labs and its former CEO, Do Kwon, marking the regulator’s largest enforcement action to date.
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SEC Executed 11 Enforcement Actions In 2024
According to a report by Social Capital Markets, the SEC executed 11 enforcement actions in 2024, significantly fewer than the 30 actions in 2023. However, the total amount of fines imposed this year dwarfed the previous year’s $150.3 million.
“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,” the Social Capital Markets report noted.
🚨BREAKING: 🇺🇸SEC crypto enforcement reaches $4.7 billion this year, surging 3,000% compared to 2023. pic.twitter.com/C2d8Tl0Tec
— SmartViewAI.Com (@smartviewai) September 10, 2024
The SEC’s aggressive enforcement strategy isn’t new. In 2019, it hit the social messaging network Telegram with a $1.24 billion penalty, which contributed significantly to that year’s rise in average fines. Since then, the average fine has fluctuated, but the Terraform Labs case catapulted the 2024 average fine to over $420 million.
Notably, other firms fined by the SEC with amounts exceeding $100 million include GTV Media Group, Ripple Labs, and fraudsters John and Tina Barksdale. Despite these high-profile cases, nearly half of the fines since 2020 have been below $1 million, while 30% fell between $1 million and $10 million.
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SEC Concludes Investigation Of Hiro Systems And Paxos
Back in July, the SEC closed its three-year investigation into Hiro Systems. The agency’s conclusion came just a day after it closed a separate case involving stablecoin issuer Paxos.
Prior to that, the SEC also concluded its investigation into stablecoin issuer Paxos without recommending any enforcement action. At the time, Paxos confirmed the closure of the probe regarding its USD-backed stablecoin, formerly known as Binance USD (BUSD).
These conclusions came as the SEC has been facing growing criticism due to its “regulation-by-enforcement” approach to the crypto industry. In July, a coalition of seven U.S. states came together to challenge the agency’s regulation of cryptocurrency.
Led by Iowa Attorney General Brenna Bird, the states have filed an amicus brief arguing that the SEC’s attempt to regulate cryptocurrencies constitutes a “power grab” that would stifle innovation, harm the crypto industry, and exceed the agency’s authority.
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Disclaimer: Crypto is a high-risk asset class. This article is provided for informational purposes and does not constitute investment advice. You could lose all of your capital.
