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SEC fines crypto firms $4.68 billion amid 2024 enforcement surge

SEC fines crypto firms $4.68 billion amid 2024 enforcement surge

GrafaGrafa2024/09/11 05:55
By:Mahathir Bayena

The US Securities and Exchange Commission (SEC) has imposed $4.68 billion in fines on the cryptocurrency sector in 2024, marking a staggering 3,018% increase from the previous year.

This substantial rise highlights the SEC’s intensified regulatory approach, emphasizing transparency, investor protection, and compliance in the rapidly evolving crypto industry.

A major part of the 2024 fines stems from a high-profile case against Terraform Labs and its co-founder, Do Kwon.

The SEC fined Terraform Labs $4.47 billion following the collapse of its algorithmic stablecoin, TerraUSD (CRYPTO:UST), which led to significant investor losses.

In June 2024, Terraform Labs settled with the SEC over allegations of misrepresenting the stability and security of its digital assets.

Although the SEC initiated fewer enforcement actions this year—11 compared to 30 in 2023—the total fines surged dramatically from $150.3 million in 2023 to billions in 2024.

This shift signifies a strategic change in the SEC’s approach, focusing on fewer cases but securing larger penalties that set important precedents.

The SEC has also targeted companies like Ripple and Telegram for unregistered token sales and other securities law violations.

“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,” stated Social Capital Markets.

From 2019 to 2024, fines have escalated significantly, with the average fine soaring from $3.39 million in 2018 to $426 million in 2024, reflecting a 12,466.37% increase.

These fines include various financial penalties such as forfeiture amounts, disgorgement, civil penalties, settlement sums, and prejudgment interest, forming part of the SEC’s strategy to combat illegal activities in the crypto market.

However, the SEC’s aggressive enforcement has faced criticism.

Some in the crypto community argue that such stringent regulations could stifle innovation with excessively harsh penalties.

One user on X commented, “US SEC/Gary Gensler are literally acting like ransomware thugs. They threaten so many crypto companies with phony lawsuits and then settle with a big fine.”

The SEC's enforcement methods have also encountered legal challenges.

In a case against D.E.B.T. Box, a federal judge accused the SEC of “bad faith conduct,” ordering the agency to pay $1.8 million in legal costs.

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Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

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