SEC crypto fines spiked 3,018% in one year

The SEC’s aggressive enforcement of digital assets has led to multibillion-dollar settlements, the bulk of which occurred this year.

The total fines imposed on crypto companies since the U.S. Securities and Exchange Commission expanded its regulatory authority to the nascent crypto sector in 2013 have exceeded $7.42 billion, according to a study shared with crypto.news by Social Capital Markets on September 9.

As the SEC increased its pressure on Web3 in 2024, 68% of the lifetime fines imposed on cryptocurrency companies, amounting to $4.68 billion, attracted attention.

The SEC and Do Kwon’s Terraform Labs have reached a record-breaking $4.68 billion settlement, surpassing the $4.3 billion settlement signed in 2023 between the U.S. Department of Justice, cryptocurrency exchange Binance, and its founder Changpeng Zhao.

While the SEC has already pursued 11 cases this year, 2023 has been the most active period for cryptocurrency-related enforcement actions, with the agency filing 30 lawsuits against Web3 service providers and securing $150 million in settlements.

SEC lawsuits against cryptocurrency businesses | Source: Social Capital Markets SEC lawsuits have increased since 2018

The SEC’s crackdown on cryptocurrencies accelerated in 2018, with fines imposed on digital asset companies reaching double digits for the first time.

By 2019, the average annual fines levied against cryptocurrency companies had increased by 2,000%. The increase was primarily due to the $1.2 billion fine imposed on Pavel Durov’s Telegram Group Inc. and its subsidiary The Open Network (TON) Issuer.

This pattern of cases confirms that the SEC’s “regulation by coercion” approach predates Gary Gensler’s appointment as chairman.

For many on Web3, Gensler’s face ranks high among anti-crypto regulation rhetoric. Nearly 20,000 Bitcoin (BTC) 2024 participants enthusiastically applauded former President Donald Trump’s promise to oust Gensler if he is re-elected.

As of now, Gensler remains SEC chairman and the agency is continuing its massive crypto crackdown. The multi-agency effort has become infamous as “Operation Choke Point 2.0.”

Many cryptocurrency companies, including Coinbase and Ripple (XRP), are in legal battles with the SEC. Gensler noted that most digital assets are securities and therefore do not comply with federal law.