SEC Sues Crypto Firms for $4.7 Billion in 2024

Key Insights

• The SEC massively increased its enforcement action against crypto execs and firms in 2024.

• The settlement with Terraform Labs and Do Kwon accounted for the most significant fine of the year.

• Data shows that the agency is focusing on high-profile cases, which shows up as fewer litigations but larger penalties.

• The ongoing regulatory approach may influence the future of crypto in the US, especially as the elections approach.

The US Securities and Exchange Commission has been pumping up its enforcement action in the crypto space this year.

According to recent reports, the agency has collected fines and penalties, reaching a historic $4.7 billion this year alone.

This comes as a staggering 3,000% increase compared to 2023 and shows a trend of growing scrutiny in the crypto space.

Massive Settlement with Terraform Labs

According to a report from Social Capital Markets, a single, massive fine was responsible for one of the biggest boosts in this record year of fines.

This fine came from the $4.47 billion settlement with Terraform Labs and its former CEO, Do Kwon.

According to reports, this settlement was finalized in June 2024 and is also the agency's biggest enforcement cash-in to date.

In detail, Terraform Labs and Kwon were found liable for several crimes, including misleading investors and manipulating markets, after the Terra ecosystem collapsed in 2022.

Interestingly, Social Capital Markets reports that this year, the SEC only launched 11 enforcement actions against crypto firms—which is a lot less than the 30 cases it pursued the year prior.

However, despite this decline In the number of cases, the fines still skyrocketed, thanks to the agency's decision to focus on bigger cases instead of numerous ones.

The SEC only collected around $150.3 million from enforcement actions in 2023, which means that in comparing both years, the penalties skyrocketed by 3,018%.

How 2024 Stands Out for Crypto Space?

To understand the SEC's approach in 2024, it is helpful to look back at its previous actions.

For example, In 2019, the agency fined the social messaging giant Telegram $1.24 billion for offering an unregistered security in its initial coin offering (ICO).

This penalty, which included $1.2 billion in disgorgement, set a high bar for future cases and contributed to the average fine of $70 million that year.

In the following years, the average fine fluctuated between $5 million and $35.2 million.

However, due to the Terraform Labs case, this metric has jumped to an insane $420 million for 2024.

Also, while Terra and Kwon's fine made the biggest splash this year, it wasn’t the only high-profile case.

The SEC also collected from several other big players, including Ripple Labs' $125 million for the sale of its XRP tokens in 2017.

Others, like fraudsters John and Tina Barksdale, also paid more than $100 million in fines for scamming and misleading investors.

The Broader Picture

While the SEC has collected massive fines so far, not all enforcement actions resulted in multi-million-dollar penalties like the aforementioned.

Since 2020, 46% of the agency’s penalties have been below $1 million, with 30% of them ranging between $1 million and $10 million.

This spread shows that the enforcement actions have been focused on making headlines with billion-dollar fines instead of chasing small fry.

Overall, the SEC's harsher stance on crypto regulation in 2024 shows a clear shift in strategy, which might play a major role in the country's regulatory landscape within the next four years—especially as the US presidential elections draw nearer.

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