SEC Nets Record $8.2B in Enforcement Actions for 2024

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As a researcher who has spent years following the twists and turns of the financial world, I find it both fascinating and heartening to see the SEC’s unprecedented recovery efforts in 2024. The Terraform Labs case, with its staggering $8.2 billion haul, is a testament to the agency’s relentless pursuit of justice, particularly in the complex realm of cryptocurrency.

In 2024, the U.S. Securities and Exchange Commission (SEC) reported that they successfully enforced penalties totaling approximately $8.2 billion.

This recovery marks the biggest sum the commission has ever recouped, a considerable portion of which stemmed from the prominent Terraform Labs case.

Terraform Labs Leads SEC Recoveries

The report from November 22 indicates that in 2024, the SEC brought 583 enforcement actions, which represented a decrease of 26% compared to the prior year. Out of these cases, 431 were independent investigations, while 93 targeted individuals who had previously faced orders (such as criminal convictions or civil injunctions), and an additional 59 focused on companies that failed to submit required filings with the agency.

safeguarding investors, especially those involved with cryptocurrencies, which have seen heightened risks because of their swift expansion.

Gensler stated that The Enforcement Division acts as a dedicated police officer, consistently pursuing truth and justice according to the law. Its role is to track down and punish those who have acted unlawfully.

Despite a decrease in cases, the Securities and Exchange Commission (SEC) was able to recover a substantial amount: $6.1 billion in disgorgement and an additional $2.1 billion in penalties. Notably, over half of this total sum was obtained from one significant cryptocurrency-related fraud case involving Terraform Labs, a blockchain technology company founded by Do Kwon and Daniel Shin.

The SEC had accused the company and Do Kwon of committing large-scale fraud that caused billions of dollars in investor losses when its algorithmic stablecoin TerraUSD (UST) and its associated cryptocurrency, LUNA, collapsed. The two parties were ordered to pay the regulator $4.5 billion following a court battle.

The report also revealed actions against other crypto-related scams, such as HyperFund and NovaTech Ltd. The two, purporting to be crypto investment platforms, raised more than $2.2 billion from investors worldwide. All their principals have been charged with operating fraudulent schemes, with HyperFund co-founder Brenda Chunga opting to settle the charges.

A Strategic Shift

Based on a report from Social Capital Markets, we saw a decrease in crypto-related cases brought forward by the SEC to just 11 in the year 2024. However, the penalties connected with these actions significantly increased, soaring more than 3,000% compared to the $150.3 million in fines from 2023.

According to Social Capital Markets, the significant rise in penalties being imposed is largely due to the Terraform Labs settlement. Moreover, their report indicates that the Securities and Exchange Commission (SEC) is increasingly targeting high-profile and influential cases, which suggests a strategic change in the agency’s enforcement tactics.

Under Gensler’s leadership, the financial oversight body gained a stern image due to its rigorous examination of cryptocurrency firms. Yet, despite these tight controls, the American digital asset sector maintains hope that regulatory constraints will become less stringent, potentially after President Donald Trump’s re-election.

Previously, Trump had pledged to dismiss Gensler as part of his election promises. Notably, Gensler, who has been under criticism, announced his intention to resign from his position in January 2025, coinciding with Trump’s expected inauguration.

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2024-11-26 04:10