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Record $5 Billion in SEC Fines Following Intense Year of Crypto Crackdowns
- SEC annual statement shows enforcement actions up year-on-year.
- Nearly US$5 billion in penalties issued, just under US$1 billion distributed to investors.
An annual enforcement actions statement from the US Securities and Exchange Commission (SEC) shows that enforcements were up 3% on the previous fiscal year at 784, and total penalties won were just under US$ 5 billion (AU$ 7.7 billion), the second-highest ever recorded.
Enforcement actions relating to crypto only made up a small fraction of the agency’s total workload—but some of those cases, such as those against FTX founder Sam Bankman-Fried and Terraform Labs founder Do Kwon, were significant for the industry and closely followed in broader circles.
Curiously the SEC’s case against Ripple, which has been high profile for several years and is widely viewed as a significant loss for the agency, was not mentioned in the statement.
SEC Crypto Cases Include Fraud, Unregistered Securities, Touting
According to the SEC’s statement, most of the agency’s enforcements against crypto fell into four categories:
- Fraud.
- Unregistered offerings;
- Touting (promoting without disclosing payment); and
- Unregistered exchanges.
Fraud cases included the cases against Bankman-Fried and Do Kwon, and also PulseChain and Hex founder Richard Heart. SEC also mentioned the agency’s cases against leading crypto exchanges Coinbase and Binance as part of its campaign against “rampant noncompliance in the crypto asset intermediary space.”
Speaking about the agency’s enforcement efforts this year SEC Chair, Gary Gensler, said investors are the major beneficiaries of the SEC’s enforcement work:
The investing public benefits from the Division of Enforcement’s work as a cop on the beat. Last fiscal year’s results demonstrate yet again the Division’s effectiveness—working alongside colleagues throughout the agency—in following the facts and the law wherever they lead to hold wrongdoers accountable.
Gary Gensler, SEC Chair Disagreement Over SEC’s Approach
Not everyone is in agreement that the SEC is doing a good job protecting investors, particularly in the crypto space.
Speaking recently at a Ripple Swell event, Ripple CEO Brad Garlinghouse, said he believes the agency has stopped effectively fulfilling its primary role:
I think the SEC in my opinion has lost sight of their mission to protect investors and the question is who are they protecting in this journey.
Brad Garlinghouse, Ripple CEO The SEC’s own statistics also suggest perhaps investors aren’t benefitting as much from the enforcement actions as they may hope, with under US$ 1 billion (AU$ 1.5 billion) of the penalties collected being distributed to investors this fiscal year.
Author
Jody McDonald
Jody is a Brisbane-based freelance writer who specialises in writing about business, technology, and the future of work.
