The US Securities and Exchange Commission is making headlines after a report revealed that it has carried out an unprecedented crackdown on the cryptocurrency industry: Fines it imposed on cryptocurrency companies jumped to a record $4.68 billion in 2024, up 3,018% from the previous year.
Much of the rise comes from a settlement with Terraform Labs and its co-founder, Du Quan, for selling unregistered securities and deceiving investors.
According to Law Enforcement vs. Crypto Industry Report 2024 According to a report published by Social Capital Markets, these unprecedented actions by the SEC signal a major shift in its approach to monitoring the rapidly changing digital asset market.
Standard fines
The SEC’s 2024 fines represent about 63% of the total penalties it has imposed since 2013, bringing the cumulative total to $7.42 billion. The SEC’s aggressive stance is evident in its recent enforcement actions, which have escalated since 2018, when penalties first exceeded 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. The shift signals a new commitment to holding crypto companies accountable for their actions.
The nearly $4.70 billion fine imposed on Terraform Labs remains the highest imposed on any crypto company to date.
Source: Social Capital Markets
This case supersedes the previous record — a nearly $4.3 billion settlement between the U.S. Department of Justice and Binance with its founder in 2023. The SEC’s actions are not isolated; they are part of a broader trend of increased scrutiny and enforcement in the crypto space.
Total crypto market cap at $1.97 trillion on the daily chart: TradingView.com
SEC’s Advanced Strategy
The SEC’s enforcement strategy has evolved significantly over the past decade. Initially, fines were relatively modest, but as the cryptocurrency market has grown, so have penalties.
For example, in 2019, the SEC fined Telegram $1.24 billion for selling an unregistered token. This pattern of escalating fines has continued, with Ripple Labs facing a $125 million fine in 2021 for selling XRP as an unregistered token. protection.
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The way forward
The SEC’s increased enforcement of its rules has sent shockwaves through the crypto community, with companies like Coinbase and Ripple now locked in legal battles with the regulator.
According to SEC Chairman Gary Gensler, most digital assets fall under Securities Ruleswhich has sparked some intense debate about the direction of cryptocurrencies in the United States.
Critics say the SEC’s actions are forcing crypto companies offshore and stifling innovation. Proponents say stronger guidelines are urgently needed to protect investors and ensure market integrity.
Featured image by Getty Images, chart by TradingView