As a seasoned researcher with a keen interest in the dynamic world of finance and technology, I find myself both intrigued and concerned by the escalating enforcement actions against the cryptocurrency sector by the U.S. Securities and Exchange Commission (SEC). The staggering $4.7 billion in fines imposed in 2024 represents a remarkable increase from the previous year, highlighting a significant shift in the SEC’s approach towards this burgeoning industry.
In the year 2024, the United States Securities and Exchange Commission (SEC) significantly increased its crackdown on the cryptocurrency industry, levying approximately $4.7 billion in penalties.
This figure represents a 3,018% increase from the $150.3 million in fines issued in 2023.
Record Breaking Settlement
Based on a report from Social Capital Markets, I find that the significant increase in 2024’s figures can be largely attributed to the historic $4.47 billion settlement between the Securities and Exchange Commission (SEC) and Terraform Labs, along with its former CEO, Do Kwon. This settlement, finalized in June, marks the largest enforcement action taken by the agency to date.
This lawsuit tackled significant matters such as deceiving investors and selling unauthorized financial instruments, after the downfall of TerraUSD (UST) and its attached financial system.
2024’s total fines amounting to $4.68 billion encompass several types of fees, including forfeitures, the return of ill-gotten gains (disgorgement), civil penalties, settlement payments, and pre-judgment interest charges.
Despite a decrease in the number of regulatory actions taken, from 30 in 2023 to 11 in 2024, the overall penalties significantly increased. The average fine reached approximately $426 million in 2024, marking a substantial jump from the $14.71 million imposed in 2022.
According to the report, this pattern suggests the Securities and Exchange Commission (SEC) is moving towards imposing fewer, yet more substantial penalties, with an aim to make significant enforcement actions that serve as guidelines for the entire market.
2024 also saw significant penalties being imposed on entities such as GTV Media Group and the Barksdales, who are known fraudsters, with fines surpassing $100 million for each of them.
Crypto Fines Amounted to $7.42 Billion Since 2013
starting from 2013, the Securities and Exchange Commission (SEC) has imposed penalties amounting to over 7.42 billion dollars on the cryptocurrency sector. Interestingly, around 63% of this total penalty sum was levied in the year 2024.
In 2019, a significant fine of $1.24 billion was levied against Telegram Group Inc. and TON Issuer Inc. for conducting unregistered token sales. This fine represented an approximately 2,000% increase in the average fine compared to previous years.
In 20XX, Ripple Labs was penalized with a $125 million fine for offering XRP without proper registration, which elevated the average penalty that year to approximately $35.2 million. Nevertheless, the Securities and Exchange Commission (SEC) has not yet reached an agreement on this matter, as they retain the right to contest it.
2024 saw a strong focus on ensuring responsibility from not only corporations but also their leading figures. In this year alone, the collective fines imposed amounted to an astounding $5.08 billion, spread across 63 separate instances of accountability enforced against both entities and individuals.
Approximately half of the total fines (46%) surpassed $1 billion, primarily due to a penalty of $4.68 billion imposed on Terraform Labs. Finishments ranging from $1 million to $10 million are also frequent, comprising around 30%, and these typically involve smaller companies. Additionally, there were numerous penalties under $1 million, indicating ongoing vigilance over smaller-scale projects.
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2024-09-14 21:06