SEC Crypto Enforcement Actions: A Look at the 20 Major Charges Initiated by the SEC

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Original article by: CCN , Giuseppe Ciccomascolo

Original translation: Felix, PANews

Key Takeaways:

  • The SEC is stepping up enforcement against crypto market participants, taking a record 46 actions in 2023

  • Fraud and unregistered securities offerings are the most common charges, especially against ICOs.

  • Crypto community awaits outcome of lawsuit against Ripple

Cryptocurrency enforcement remains a top priority for the SEC, which has stepped up enforcement efforts against cryptocurrency companies and individuals under Chairman Gary Gensler. The regulator’s 2023 cryptocurrency-related enforcement actions increased 53% from 2022.

However, the crypto community’s attention is focused on the ongoing litigation between the U.S. SEC and Ripple, especially after the latest developments and two major victories for Ripple in court.

SEC Enforcement Actions Targeting Crypto Participants

In 2023, the SEC initiated 46 enforcement actions against cryptocurrencies, an increase of 53% from 2022. As of the end of 2023, the total fines against crypto market participants were approximately US$2.89 billion, of which US$281 million came from settlements reached that year.

SEC Crypto Enforcement Actions: A Look at the 20 Major Charges Initiated by the SEC

Number of U.S. SEC cryptocurrency enforcement actions, trading suspensions, delinquent filings, and cease and desist orders, 2013-2023 Source: SEC

The most common charges involved fraud and unregistered securities offerings. Of the 46 actions in 2023, 57% involved fraud, 61% involved unregistered securities offerings, and 37% involved both. In addition, 37% of the actions were related to initial coin offerings (ICOs). Notably, the SEC also took two NFT-related enforcement actions in 2023.

The percentage of enforcement actions directed solely at individuals and not companies decreased to 39% in 2023, down from 50% in 2022. In addition, in administrative proceedings, 52% of respondents acknowledged self-reporting, cooperation, or remediation efforts, up from the 2013 to 2022 average of 44%. In two administrative proceedings, the defendant’s remediation efforts and cooperation with SEC staff did not result in a fine.

Crypto-Assets and Cyber Law Enforcement Actions

Kraken

Prosecution date: November 20, 2023

Case description: Charged with operating the Kraken crypto trading platform as an unregistered securities exchange, broker, dealer, and clearing organization. Kraken agreed to cease offering or selling securities through crypto asset staking services or staking programs and to pay a $30 million civil penalty.

Status: Finalized

Celsius Network

Prosecution date: July 13, 2023

Case description: Celsius and its former CEO Alex Mashinsky are charged with violating the registration and antifraud provisions of the federal securities laws, including failing to register the offering and sale of Celsius’s crypto lending product, the Earn Interest Program. Celsius is cooperating with the SEC and has agreed to the relief requested in the lawsuit.

Status: In progress

Coinbase

Prosecution date: June 6, 2023

Case description: The platform was accused of operating its crypto asset trading platform as an unregistered national securities exchange, broker-dealer, and clearing agency, and failing to register the offering and sale of its crypto asset staking-as-a-service program.

Status: In progress

Binance and CZ

Prosecution date: June 5, 2023

Case description: The U.S. SEC filed a lawsuit in a federal court in Washington, D.C., listing 13 charges against Binance and CZ. Binance was accused of artificially exaggerating its trading volume, transferring customer funds, failing to restrict U.S. customers from accessing its platform, and misleading investors about its market monitoring. The SEC also pointed out that CZ secretly controlled customer assets, mixed and transferred investor funds. Binance agreed to forfeit $2.5 billion and pay a criminal fine of $1.8 billion, for a total of $4.3 billion. CZ was sentenced to 4 months in prison.

Status: Finalized

Justin Sun and his three wholly-owned companies

Prosecution date: March 22, 2023

Case description: The SEC accused Justin Sun and his company of offering and selling crypto asset securities Tronix (TRX) and BitTorrent (BTT) without registration, and some celebrities were also involved. Only DeAndre Cortez Way and Austin Mahone paid fines to settle the case.

Status: In progress

Terraform Labs and Do Kwon

Prosecution date: February 16, 2023

Case description: They are accused of orchestrating a multi-billion dollar fraud involving algorithmic stablecoins and other crypto asset securities.

Status: In progress

Avraham Eisenberg

Prosecution date: January 19, 2023

Case description: Avraham Eisenberg is accused of attacking the crypto asset trading platform Mango Markets by manipulating the MNGO token. Avraham Eisenberg is currently detained awaiting trial.

Status: In progress

Nexo

Prosecution date: January 19, 2023

Case description: Nexo was accused of failing to register the issuance and sale of its crypto asset lending product Earn Interest Product (EIP). To resolve the SECs allegations, Nexo agreed to pay a $22.5 million fine.

Status: Finalized

Caroline Ellison and Zixiao (Gary) Wang

Prosecution date: December 21, 2022

Case description: Alameda CEO Caroline Ellison and former FTX Trading CTO Zixiao Gary Wang were accused of participating in a years-long scheme to defraud FTX investors.

Status: In progress

Thor Technologies, Inc. and David Chin

Prosecution date: December 21, 2022

Case description: The SEC charged Thor Technologies and founder David Chin with offering and selling crypto assets designated as “Thor Tokens” without registration. The court ordered Thor Technologies to pay $744,555 in restitution and $158,638.06 in late interest, and ordered the company and David Chin to pay a $150,000 penalty each.

Status: Finalized

SBF

Prosecution date: December 13, 2022

Case description: Regulators charged Samuel Bankman-Fried (SBF) with orchestrating a scheme to defraud FTX Trading Ltd. (FTX) equity investors. The case ended with SBF being sentenced to 25 years in prison.

Status: Finalized

Kim Kardashian

Prosecution date: October 3, 2022

Case description: The influencer was accused of touting crypto-asset securities offered and sold by EthereumMax on social media without disclosing the compensation she received for the promotion. Kardashian agreed to settle and pay a $1.26 million fine.

Status: Finalized

Bloom Protocol

Prosecution date: December 13, 2022

Description of the case: Regulators charged the company with conducting an unregistered initial coin offering of crypto-asset securities. Bloom agreed to pay a $300,000 fine.

Status: Finalized

Block Bits

Prosecution date: April 28, 2022

Description of the case: The SEC charged Block Bits with raising nearly $1 million from more than 20 investors through misrepresentations about an automated digital asset trading bot that never worked. The company paid a fine.

Status: Finalized

BlockFi

Prosecution date: February 14, 2022

Description of the case: BlockFi was accused of failing to register the issuance and sale of its crypto lending products. BlockFi agreed to stop offering or selling BIAs in the United States.

Status: Finalized

Poloniex

Prosecution date: August 9, 2021

Description of the case: Poloniex agreed to pay more than $10 million to settle charges that it operated an unregistered online digital asset exchange.

Status: Finalized

Gregory Keough, Derek Acree and Blockchain Credit Partners

Prosecution date: August 6, 2021

Case description: They offered and sold securities in an unregistered manner through the DeFi market between February 2020 and February 2021. The defendants agreed to a cease and desist order, which included disgorgement of a total of $12,849,354 in ill-gotten gains and a $125,000 penalty to Keough and Acree, respectively.

Status: Finalized

Loci Inc. and CEO John Wise

Prosecution date: June 22, 2021

Description of the case: From August 2017 to January 2018, Loci and Wise raised $7.6 million from investors by offering and selling a digital token called “LOCIcoin.” They paid a $7.6 million civil penalty.

Status: Finalized

Tierion

Prosecution date: December 23, 2020

Description of the case: According to the SEC, Tierion raised approximately $25 million through the sale of “Tierion Network Tokens” (TNT) in July 2017. Tierion paid a $250,000 fine.

Status: Finalized

Virgil Capital

Prosecution date: December 22, 2020

Case description: The SEC imposed an asset freeze on Stefan Qin for alleged securities fraud. Stefan Qin was accused of defrauding investors of Virgil Sigma Fund LP since 2018, misrepresenting the fund’s strategy, and using the proceeds for personal and undisclosed high-risk investments.

Status: In progress

Ripple

The legal dispute between Ripple and the SEC began in December 2020. The SEC accused Ripple of selling XRP as an unregistered security, raising more than $1.3 billion. After years of litigation, the case went to trial in April 2024.

Ripple’s three partial victories in court last year have brought optimism to the company. These victories also led to an increase in the price of XRP. If Ripple wins the case, the value of the asset could be positively affected.

Recently, after a period of relative calm, the battle lines over data access have been reopened. Ripple recently filed a motion to keep certain financial documents and sales data confidential in connection with the SEC’s allegations. The SEC opposed the motion, saying the information was critical to the case.

However, Ripple argued that the historical data was irrelevant due to the changing circumstances of XRP sales. Now, the XRP community eagerly awaits Judge Torres’ ruling on several motions, including the final judgment in the relief phase. Although the case has lasted nearly four years, it is far from over.

This article is sourced from the internet: SEC Crypto Enforcement Actions: A Look at the 20 Major Charges Initiated by the SEC

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