SEC Crypto-related Fines Hit $2.6B Through 2022

New research shows the most number of SEC crypto-related litigation occurred in New York, but the agency has been increasing such actions in other federal courts

article-image

Source: Shutterstock / Tada Images, modified by Blockworks

share

The still-nascent cryptocurrency industry has attracted many bad actors, including some company insiders or executives. Finding the best way to regulate the industry while leaving room for innovation is of paramount concern to lawmakers across the globe, including in the US.

The Securities and Exchange Commission (SEC) has often been accused of pursuing “regulation by enforcement” rather than setting clear guidelines, and in 2022 the agency issued 30 enforcement actions against 79 digital asset market participants, Cornerstone Research said in a report published Wednesday. Of those, 56 were individuals and 23 were firms.

That represents a 50% jump from 2021 and the highest number of actions taken by the SEC since 2013. Total fines imposed came to about $2.6 billion since 2013, out of which settlements amounted to $242 million as of Dec. 2022.

Among the enforcement actions in 2022, the most recurrent infractions were related to fraud and unregistered securities offerings. 

Note: The figure focuses on the total of 127 SEC cryptocurrency enforcement actions (both litigations and administrative proceedings under Section 8A of the Securities Act and/or Section 21C of the Exchange Act). An enforcement action may be associated with more than one allegation. “Other Allegations” include claims that have been alleged in only a few litigations or administrative proceedings, such as violations of restricted period, failure to register as an investment company, fraudulent transactions by investment advisers, failure to maintain internal controls, and falsification of internal controls. | Source: Cornerstone Research

Separately, the SEC has engaged in 82 crypto-related lawsuits over the last 9 years, 43% of which were litigated in New York federal courts.

Since Gary Gensler was sworn in as chairman of the SEC in April 2021, the agency has upped its focus on crypto lending and DeFi platforms, Cornerstone said. 

The SEC was open about increasing its scrutiny on the crypto industry and decided to establish a specific Crypto Assets and Cyber Unit to scan digital asset players.

“As Chair Gensler has noted, the ‘runway is getting shorter’ for crypto intermediaries to register with the SEC. This could lead to more enforcement actions coming from the SEC’s Crypto Assets and Cyber Unit, which recently expanded its workforce to investigate securities law violations in the crypto markets,” Simona Mola, principal at Cornerstone Research, said in a statement.

BlockFi faced the largest monetary penalty by the SEC in 2022, having to pay $100 million for failing to register its crypto lending product. The most recent charge was against Sam Bankman-Fried in December for his alleged role in operating a scheme to defraud investors in FTX.

Critics point out that the SEC’s actions have generally failed to protect consumers, either focusing on cases without obvious victims, such as the LBRY case, or, as most clearly illustrated by the latest pursuit of FTX, far too late to do consumers any good.

The SEC’s approach also may have the consequence of pushing startup activity overseas, due to uncertainty and high costs of doing business in the US, members of Congress have observed.


Start your day with top crypto insights from David Canellis and Katherine Ross. Subscribe to the Empire newsletter.

Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. Subscribe to the Forward Guidance newsletter.

Get alpha directly in your inbox with the 0xResearch newsletter — market highlights, charts, degen trade ideas, governance updates, and more.

The Lightspeed newsletter is all things Solana, in your inbox, every day. Subscribe to daily Solana news from Jack Kubinec and Jeff Albus.

Tags

Upcoming Events

Javits Center North | 445 11th Ave

Tues - Thurs, March 18 - 20, 2025

Blockworks’ Digital Asset Summit (DAS) will feature conversations between the builders, allocators, and legislators who will shape the trajectory of the digital asset ecosystem in the US and abroad.

Brooklyn, NY

TUES - THURS, JUNE 24 - 26, 2025

Permissionless IV serves as the definitive gathering for crypto’s technical founders, developers, and builders to come together and create the future.If you’re ready to shape the future of crypto, Permissionless IV is where it happens.

recent research

Research Report Templates.jpg

Research

In this report, each analyst on the Blockworks Research team lays out their highest conviction thesis for 2025.

article-image

After getting snubbed by a Santa rally at the end of December, Wall Street may be due for a bump in January

article-image

Its research team continues to evaluate crypto assets like the firm has done for public equity markets and credit markets for decades

article-image

Exploring key trends promising to shape crypto in the new year, from Bitcoin DeFi to stablecoins and regulatory clarity

article-image

Framework’s Michael Anderson explains why he thinks energy could be a bigger narrative this cycle

article-image

DFlow put an interesting solution on the table in proposing conditional liquidity to divide toxic from non-toxic order flow

article-image

BlackRock’s BTC guidance gives us a sense of the buying wave that is possible