As a seasoned crypto investor with over two decades of experience navigating the ever-evolving digital asset landscape, I find myself both intrigued and slightly amused by the SEC’s record-breaking enforcement actions against Terraform Labs. The $8.2 billion fine is undeniably impressive, but it also serves as a stark reminder of the risks inherent in this space.
In the financial year 2024, the U.S. Securities and Exchange Commission established a fresh benchmark for penalties and fines from its regulatory actions, largely thanks to a significant settlement with cryptocurrency company Terraform Labs.
The agency reported a record-breaking $8.2 billion in financial restitutions during the fiscal year ending September 30, as stated in their November 22 annual report, even though the number of cases dropped by 26% compared to the previous year, totaling 583.
Approximately half of the total amount was obtained from a court victory by the SEC against Terraform and their former CEO, Do Kwon. They were required to pay a $4.47 billion settlement due to being found guilty of fraud related to the collapse of their blockchain ecosystem in 2022, which resulted in the erasure of billions of dollars.
If a fine hadn’t been imposed on Terraform, the Securities and Exchange Commission (SEC) would have seen its largest annual collection of financial penalties since 2013, totaling approximately $3.72 billion – a figure surpassed only by the $3.4 billion it collected in fines that year.
All in all, the agency amassed a total of $2.1 billion in fines and set a new record with $6.1 billion in restitution – which is essentially the recovery of unlawfully earned profits for affected investors.
As a researcher, I might rephrase it as: “In my own words, the Division of Enforcement acts as a dedicated enforcer, tirelessly pursuing truth and justice according to the law, to bring those who act unlawfully to account.” This reflects Gary Gensler’s statement about the Division of Enforcement being a steadfast enforcer following facts and law.
2025 marks the end of Chairman Gensler’s almost four-year term, during which the highest annual record was achieved; he will step down on the very same day, January 20th, 2025, when President-elect Donald Trump is scheduled to take his oath.
Under Gensler’s leadership, the Securities and Exchange Commission (SEC) has adopted a firm stance towards cryptocurrency businesses, reaching a record high of 46 crypto-related enforcement actions in the previous year.
2024 saw a decrease in crypto-related cases down to 11, however, penalties associated with the SEC’s cryptocurrency enforcement significantly increased more than threefold, primarily as a result of the Terraform settlement.
The U.S. cryptocurrency sector is optimistic that the Securities and Exchange Commission’s (SEC) enforcement actions against the industry might lessen, following President Trump’s pledge to reduce regulatory pressure in this area. Katrina Paglia, Pantera Capital’s chief legal officer, stated last week that she anticipates the numerous lawsuits filed by the SEC against the crypto sector will “gradually disappear” as Trump begins his second and final term.
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2024-11-25 04:21