Recent years have witnessed a notable escalation in the scrutiny of the cryptocurrency industry by the United States Securities and Exchange Commission (SEC), particularly in the year 2024.
While this heightened oversight has resulted in tensions between crypto entities and the SEC, the regulatory authority has remained resolute in its efforts to promote transparency, safeguard investors, and uphold legal standards.
Consequently, companies found in violation of regulatory protocols have faced substantial fines.
Revelation of SEC Fines Report
A recent report has unveiled the penalties levied on prominent cryptocurrency firms spanning the years from 2013 to 2024, providing insights into significant cases and the nature of infractions committed.
As per the report,
“Since 2013, the SEC has imposed fines exceeding $7.42 billion on crypto companies and individuals, with a significant portion, 63% amounting to $4.68 billion, being recorded in 2024 alone.”
This staggering figure of $4.68 billion in fines for 2024 predominantly involved Terraform Labs and its founder, Do Kwon.
The unprecedented penalty sets a new benchmark for the SEC’s stringent approach, concentrating on high-profile instances and highlighting violations related to unregistered securities.
Additionally, the report notes,
“The fine amount surged from $150.26 million in 2023 to $4.68 billion in 2024, representing an exponential increase of 3018%.”
Upward Trajectory of Fines Over the Years
The surge in fines commenced in 2019 with significant actions like the $1.24 billion penalty imposed on Telegram Group, leading to a substantial uptick in the average fine amount.
Although there was a slight dip in numbers in 2020, fines resurged in 2021, particularly with cases involving Ripple Labs.
By 2024, the average fine peaked at an unprecedented $426 million, primarily fueled by the historic $4.68 billion penalty against Terraform Labs and Do Kwon.
Prominent entities such as Ripple [XRP], Telegram, and Terraform Labs faced scrutiny due to their engagement in unauthorized token offerings.
Beginning from 2022, the SEC adopted a more assertive stance, not just penalizing companies but also holding their top executives answerable, underscoring a commitment to stricter oversight within the cryptocurrency domain.
As financial penalties escalate, adherence to regulatory standards has become increasingly imperative for cryptocurrency firms.