SEC sets a new record with 8.2 billion USD in fines and compensations, mostly stemming from the Terraform Labs lawsuit.
On November 22, the U.S. Securities and Exchange Commission (SEC) just released its annual report, noting that the fines and compensations reached a record level of 8.2 billion USD in the fiscal year ending September 30, 2024. This is the highest figure ever recorded, significantly driven by the high-profile lawsuit against Terraform Labs and former CEO Do Kwon.
The collapse of the Terraform Labs ecosystem in 2022 caused billions of USD in damages to global investors. After an investigation and lawsuit process, the SEC reached a settlement with a fine of 4.47 billion USD from Terraform Labs, accounting for more than half of the total fines and compensations in the past year. Excluding the revenue from Terraform Labs, the SEC only collected 3.72 billion USD, marking the lowest level since 2013.
Source: SEC
According to the report, out of a total of 8.2 billion USD, the SEC collected 2.1 billion USD from civil penalties and 6.1 billion USD from forcing the return of illegal profits to investors, both reaching the highest levels in the agency's history. SEC Chairman Gary Gensler, who is about to finish his term, emphasized the role of the Enforcement Division in protecting investor interests and ensuring compliance with the law.
Under his leadership, the SEC has intensified oversight of the cryptocurrency market, peaking at 46 related lawsuits in 2023. However, this number has sharply decreased to just 11 cases in 2024. Nevertheless, the total fines remained high thanks to significant revenue from Terraform Labs.
The fiscal year 2024 marks nearly four years of Mr. Gensler's term, who is expected to leave the position of SEC Chairman on January 20, 2025, coinciding with the inauguration of President-elect Donald Trump. Observers expect the new administration to loosen regulations on the cryptocurrency industry, in line with Mr. Trump's commitment to reduce government intervention in the financial sector.
Katrina Paglia, Chief Legal Officer of Pantera Capital, commented that some lawsuits pursued by the SEC may “quietly disappear” under President Trump. This could provide an opportunity for recovery for the cryptocurrency industry, which has been under significant pressure from tightening measures by regulators recently.