Recently, US regulatory agencies seem to be rushing to achieve results for the soon-to-end fiscal year 2024, increasing their regulatory enforcement力度 on the crypto industry.
Last week, the Wall Street Journal reported that the federal government is investigating cryptocurrency company Tether for potentially violating sanctions and anti-money laundering regulations. Although Tether has denied this, it has caused some panic in the market.
Throughout October, the SEC has charged at least 20 crypto projects and individuals, including Cumberland, Gotbit, CLS, ZM Quant, Saitama, and Robo Inu, seizing over $25 million in cryptocurrency. Many of these charges have been enforced in conjunction with the FBI and DOJ, with crypto market-making and trading firms that are closer to money becoming the focus of the crackdown.
As US regulators have not eased their scrutiny on crypto, the number of crypto lawsuits and settlements in 2024 may reach a new high.
In 2024, crypto settlements are expected to reach nearly $20 billion, setting a new high, with leading players becoming the focus of enforcement.
2024 is projected to be a year of increased enforcement in US crypto regulation. According to Coingecko data, as of October 9, US regulatory agencies' crypto enforcement settlements have reached nearly $20 billion in 2024, a growth of 78.9% compared to 2023, accounting for nearly two-thirds of the total settlement amount over the last five years. Given that 2024 is not yet over and regulatory actions have not slowed down, it is expected that this year's crypto litigation settlements will surpass those of 2023.
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From the SEC's perspective alone, according to a report updated on October 19 by Social Capital Markets, the SEC's fines against the crypto industry in 2024 have reached $4.68 billion. Since 2013, the SEC has imposed a total of $7.42 billion in fines on cryptocurrency companies and individuals, meaning that 63% of the fine amounts are concentrated in 2024.
The fine amount in 2024 has increased by 3,018% compared to $150.26 million in 2023.
Although the amount of fines has increased, the number of incidents has decreased. In 2024, the SEC's crypto enforcement actions totaled only 11, far below the 30 actions in 2023.
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The SEC's crypto enforcement strategy has evidently been adjusted, beginning to target representative cases and adopting enforcement actions with greater impact (such as higher fines, more vigorous promotions, etc.) to establish industry precedents.
The SEC's massive fines this year were primarily due to contributions from Terra and its co-founder Do Kwon, setting a precedent for SEC enforcement in the crypto space.
This year, aside from Terra, leaders across various crypto sectors have also been caught in the SEC's regulatory lawsuits.
In April, DeFi leader Uniswap Labs and ConsenSys received Wells Notices from the SEC before litigation, both accused of violating securities laws by not registering as brokers and participating in the issuance and sale of certain unregistered securities. Among them, ConsenSys was officially sued by the SEC on June 28.
On August 28, NFT market leader OpenSea and leading crypto exchange Crypto.com also received Wells Notices, accused of trading NFTs or tokens on their market that may be considered unregistered securities.
In October, the SEC also collaborated with the FBI and DOJ to enforce against the largest meme market maker, Gotbit, and charged the leading market maker Cumberland with violating securities laws.
While the market speculates on who the next regulatory target is, Fox Business reporter Eleanor Terrett recently stated on the X platform that in 2024 no major cryptocurrency participants registered with the SEC, yet the committee has included cryptocurrencies in its 2025 review priority list.
Terrett speculates, 'The only two crypto assets that have interacted with the SEC in a regulatory role (not enforcement role) are the Bitcoin and Ethereum ETFs. Is the review focused on these ETFs and the companies partnering with them?'
According to the Wall Street Journal, the US Treasury has set its sights on the largest stablecoin issuer, Tether.
Oppressive regulation is a catalyst for memes; will Trump's rise negatively impact memes?
Castle Island Ventures co-founder Nic Carter stated on his social platform that the hype around meme coins is largely a reaction to the SEC's oppressive regulations. If the SEC regulated rationally, the demand for trading meme coins would decrease.
Crypto KOL @WutalkWu also believes that one regulatory reason for the popularity of meme coins is that the SEC does not allow issuers to assign value to tokens, otherwise they must register as securities.
He stated that under such regulatory circumstances, many VC tokens have become meme coins. What should have been equity investments, income dividends, and long-term follow-ups from VCs have turned into projects being treated as memes.
However, if Trump is elected, the situation may change. Overseas crypto KOL @malekanoms analyzed that a Trump victory would have a negative impact on memes.
@malekanoms believes that the Republican victory will overturn all of this, restoring initial coin offerings (ICOs), implementing universal airdrops, and rationalizing other forms of tokens. Additionally, they may also make fee conversions and token dividends possible. The rationalization of US regulations refocuses attention on dApps and other truly important matters in the crypto space, but may also lead to a prolonged bear market.
Increased regulation raises operational costs for businesses, making hiring officials a trend.
To minimize the operational costs associated with hefty fines, it has become a trend for crypto companies to hire government officials.
FOX reporters noted that this year the SEC's 'revolving door' phenomenon is particularly evident, with several prominent officials leaving to enter private companies.
Former Deputy Director of the Crypto Assets and Cyber Department Carolyn Welshhans has joined Morgan Lewis, focusing on securities enforcement matters.
Former Director of the Enforcement Division Gurbir Grewal joins Milbank Law as a partner, and the firm is currently representing clients like Binance in lawsuits against the SEC, which were initiated during Grewal's tenure.
Former head of the crypto assets and cyber unit David Hirsch joins McGuireWoods LLP to provide consulting services on crypto-related matters and cybersecurity regulations.
Ladan Stewart, who previously filed lawsuits against Coinbase and Ripple on behalf of the SEC, has also joined White & Case to assist clients in responding to SEC enforcement actions related to the crypto industry.
In addition to hiring officials, Uniswap's launch of Unichain is a way to respond to regulations. Crypto KOL @_FORAB believes future DeFi projects with staking yields should follow Uniswap's example to launch their application chains to avoid securities issues in regulations. 'After all, running a standalone chain is far less costly than paying fines to the SEC.'
With Gary Gensler's term ending, will crypto regulation usher in spring?
In just a few days, the 2024 US presidential election will conclude. Whether Trump or Kamala Harris wins, SEC Chairman Gary Gensler may leave office early, although his term was originally set to end on January 5, 2026.
However, Trump explicitly stated at the Bitcoin conference in July that he would fire Gensler, while Kamala Harris's team has met with crypto industry insiders privately, signaling a reset of industry relations.
US Congressman French Hill (R-AR) stated in an interview with the Thinking Crypto Podcast that the SEC should have new leadership next year, regardless of which party controls the White House.
Ripple Labs CEO Brad Garlinghouse also predicts that Gensler will leave after the upcoming presidential election, regardless of the election outcome.
According to CNBC, the potential successors to Gensler include two former Commodity Futures Trading Commission (CFTC) chairs from Trump's first term, J. Christopher Giancarlo and Heath Tarbert, current Robinhood Chief Legal Officer and former SEC commissioner Dan Gallagher, and Paul Atkins, who served as an SEC commissioner under the Bush administration.
Based on their past statements or regulatory attitudes during their tenures, most seem to have a friendlier attitude towards cryptocurrencies compared to Gensler.
In addition to hoping for a more lenient attitude from US regulators, crypto companies need clearer regulatory rules. Rather than spending substantial resources figuring out how to avoid lawsuits, crypto companies might prefer to focus on building under more definite rules.
Consensys sent an open letter to future US presidents last week, calling for clear and supportive regulations for cryptocurrencies and Web3.
SEC Commissioner Mark T. Uyeda recently pointed out that countries in the Indo-Pacific region such as Japan, Singapore, and Hong Kong have already established clear frameworks that support innovation while protecting investors. In contrast, the US, due to the lack of clear guidelines, has left market participants facing uncertainty. He will urge the US to adopt a more proactive attitude toward crypto regulation.
Disclaimer: This article does not constitute investment advice. Users should consider whether any opinions, views, or conclusions in this article align with their specific circumstances and comply with relevant laws and regulations in their country or region.
This article is authorized for reprint from: (MarsBit)
Original author: flowie, Chain Catcher
