The US Securities and Exchange Commission is hogging the headlines after a report disclosed that it had attained a record crackdown on the crypto industry: Fines it imposed on crypto firms leaped to a record $4.68 billion in 2024, increasing 3018% over the previous year.
Much of this jump comes from a settlement with Terraform Labs and its co-founder, Do Kwon, for selling unregistered securities and deceiving investors.
According to the Enforcement vs Crypto Industry Report 2024 by Social Capital Markets, these unprecedented actions by the SEC indicate a seismic shift in its approach toward policing the fast-changing digital asset market.
Record-Breaking Fines
The SEC’s 2024 fines account for 63% of the total penalties levied since 2013, bringing the cumulative total to $7.42 billion. The agency’s aggressive stance is evident in its recent enforcement actions, which have escalated since 2018 when penalties first entered double digits.
Source: Social Capital Markets
In 2023, the SEC imposed only $150.27 million in fines, a stark contrast to this year’s record-breaking figure. This shift indicates a newfound commitment to holding crypto firms accountable for their actions.
The nearly $4.70 billion fine leveled against Terraform Labs remains the highest imposed on any crypto company to date.
Source: Social Capital Markets
This case supplanted the previous record–an approximately $4.3 billion settlement between the US Justice Department and Binance along with its founder in 2023. The SEC’s actions are not isolated; they form part of a broader trend of increasing scrutiny and enforcement in the crypto space.
Total crypto market cap at $1.97 trillion on the daily chart: TradingView.com
The Evolving Strategy Of The SEC
The SEC’s enforcement strategy has evolved significantly over the past decade. Initially, fines were relatively modest, but as the crypto market grew, so did the penalties.
In 2019, for example, the SEC imposed a $1.24 billion fine against Telegram for conducting an unregistered token sale. This pattern of escalating fines continued, with Ripple Labs facing a $125 million penalty in 2021 for selling XRP as an unregistered security.
Related Reading: Is ‘Green’ Bitcoin Mining The Future? Japanese Power Giant Thinks So
The Road Ahead
More enforcement by the SEC has sent shockwaves through the crypto community. Indeed, today, most of the firms, like Coinbase and Ripple, are in a legal battle with the regulator.
Most digital assets, according to SEC Chair Gary Gensler, fall under securities rules, which fuels some intense arguments about the direction of crypto in the US.
Critics say the SEC’s activities force crypto companies abroad and stifles innovation. Strong guidelines, according to advocates, are much needed to safeguard investors and ensure market integrity.
Featured image from Getty Images, chart from TradingView