In a bid to bolster transparency, protect investors, and ensure legal compliance, the US Securities and Exchange Commission [SEC] has ramped up its enforcement actions against crypto firms.
Background
- Early on, the SEC’s interference with the crypto industry was fairly minimal
- The fines ranged from $53,755 in 2016 to $9.02 million in 2015
- The ICO boom period in 2017 was a turning point, with the becoming more aggressive and high-profile companies becoming the main targets
Details
- From $150.26 million [2023] to $4.68 billion [2024], the amount of the fine imposed jumped by 3018%
- The 11 enforcement actions initiated this year resulted in an average fine of $426 million
- The latest figure surpasses the average fine in prior years
- Back in 2018, the average hovered around $3.39 million and the jump to the current number highlights the growing financial risk for crypto companies that fail to adhere to regulatory standards
Why should you pay attention?
- Even though the number of enforcement action cases have been low this year when compared to 2023, the amount netted is at its peak
- 2024 has already become a record-breaking year, with $4.68 billion in fines, primarily driven by the SEC’s hefty penalty against Terraform Labs and its co-founder, Do Kwon
Zooming out
- Alongside companies, the SEC has been targeting executives
- The report noted,
“Fines categorized under “Firm + Individual” penalties account for $5.08 billion across 63 enforcement actions, emphasizing the agency’s intent to penalize both corporate structures and the decision-makers involved.”
- Parallelly, the overall increase in fine amounts indicates a strategic shift toward “fewer, high-impact cases”
- Even though compliance seems to be the need of the need of the hour, regulatory ambiguity continues to hinder firms
