Bitrabo Editorial
The US Securities and Exchange Commission (SEC) is making headlines following a report that revealed an unprecedented crackdown on the cryptocurrency sector: Fines imposed on crypto businesses soared to an astonishing $4.68 billion in 2024, marking a staggering 3018% increase from the prior year.
A significant portion of this rise stems from a settlement with Terraform Labs and its co-founder, Do Kwon, who were charged with selling unregistered securities and misleading investors.
The Enforcement vs Crypto Industry Report 2024 published by Social Capital Markets highlights that these historic actions by the SEC signify a profound change in its regulatory approach toward the rapidly evolving digital asset landscape.
Historic Fines Imposed
In 2024, the SEC’s fines represent 63% of the total penalties issued since 2013, bringing the overall total to $7.42 billion. The agency’s firm stance is clear, with an increase in enforcement actions since 2018, the year when penalties first surpassed the double-digit range.
In stark contrast to 2023, when the SEC issued only $150.27 million in fines, the current year’s figures demonstrate a significant shift towards holding crypto firms accountable for their actions.
The fine of nearly $4.70 billion against Terraform Labs remains the largest ever levied against a cryptocurrency firm.
This penalty surpasses the previous record of roughly $4.3 billion from a 2023 settlement involving the US Justice Department and Binance along with its CEO. The SEC’s actions are indicative of a rising trend in scrutiny and enforcement within the cryptocurrency sector.
Shifting Enforcement Tactics of the SEC
The enforcement strategy of the SEC has changed dramatically over the last decade. Initially, fines were rather small, but as the cryptocurrency market expanded, so did the scales of penalties.
For instance, in 2019, the SEC fined Telegram $1.24 billion for an unauthorized token sale. This trend of rising fines continued with Ripple Labs receiving a $125 million penalty in 2021 for the unlawful sale of XRP as a security.
Related Reading: Is ‘Green’ Bitcoin Mining The Future? Japanese Power Giant Thinks So
Looking Forward
The SEC’s heightened enforcement has reverberated through the cryptocurrency community, with many firms like Coinbase and Ripple currently facing legal disputes with the regulator.
SEC Chair Gary Gensler asserts that most digital assets are categorized under securities regulations, sparking heated debates about the future of cryptocurrency in the United States.
Critics argue that the SEC’s actions are driving crypto companies overseas and hindering innovation. Supporters, however, claim that stronger regulations are vital to protect investors and maintain market integrity.
Featured image from Getty Images, chart from TradingView