Original title: (2024 Crypto Settlement Amounts Reach Nearly 20 Billion Dollars, Will There Be a Regulatory Spring After the Elections?)
Original author: flowie, ChainCatcher
Recently, U.S. regulatory agencies seem to be rushing to meet performance targets as the end of the 2024 fiscal year approaches, accelerating regulatory enforcement in the crypto space.
Last week, according to The Wall Street Journal, the federal government is investigating cryptocurrency company Tether for possible violations of sanctions and anti-money laundering regulations. Although Tether denies this, it has still caused some panic in the market.
Throughout October, the SEC has at least accused more than 20 crypto projects and individuals, including Cumberland, Gotbit, CLS, ZM Quant, Saitama, and Robo Inu, seizing over 25 million dollars in cryptocurrencies. Many of these accusations were also enforced jointly with the FBI and DOJ, targeting crypto market making and trading institutions closer to money.
With U.S. regulatory bodies not easing up on crypto scrutiny, the record for crypto lawsuits and settlements in 2024 may hit a new high.
Crypto settlement amounts in 2024 near 20 billion dollars hit a new high, with leading players becoming the focus of crackdowns.
2024 is expected to be a year of significant increases in U.S. crypto regulatory enforcement. According to Coingecko data, as of October 9, 2024, U.S. regulatory agencies' crypto enforcement and settlement amounts have reached nearly 20 billion dollars, a 78.9% increase from 2023, accounting for nearly two-thirds of the total settlement amount over the past five years. Given that 2024 is not yet over and regulatory actions have not slowed, this year's crypto lawsuit and settlement records are expected to surpass those of 2023.
From the SEC's perspective, according to a report updated on October 19 by social capital markets, the SEC's fines in the crypto sector for 2024 amount to as high as 4.68 billion dollars. Since 2013, the SEC has imposed a total of 7.42 billion dollars in fines on crypto companies and individuals, meaning that 63% of the total fines have been concentrated in 2024.
The fine amount for 2024 is expected to increase by 3018% compared to 2023's 150.26 million yuan.
Although the amount of fines has increased, the number of incidents has decreased. In 2024, the SEC had only 11 crypto enforcement actions, far fewer than the 30 actions in 2023.
The SEC's crypto enforcement strategy has clearly adjusted, beginning to take more impactful enforcement actions (such as larger fines and more vigorous publicity) targeting representative cases to set industry precedents.
This year's massive fines from the SEC are primarily attributed to Terra and its co-founder Do Kwon, setting a precedent for SEC enforcement in the crypto space.
This year, apart from Terra, leading players in all crypto sectors have not escaped the SEC's regulatory litigation.
In April, DeFi leader Uniswap Labs and ConsenSys both received Wells Notices before the SEC's pre-lawsuit phase, accused of their products violating securities laws, failing to register as brokers, and participating in the issuance and sale of certain unregistered securities. ConsenSys was officially sued by the SEC on June 28.
On August 28, leading NFT marketplace OpenSea and top crypto exchange Crypto.com also received Wells Notices, accused of trading NFTs or tokens on their marketplace that may be considered unregistered securities.
In October, the SEC also collaborated with the FBI and DOJ to crack down on the largest meme market maker Gotbit and accused leading market maker Cumberland of violating securities laws.
As the market speculates about which regulatory target the U.S. agencies will choose next, Fox Business reporter Eleanor Terrett recently stated on platform X that no major cryptocurrency players registered with the SEC in 2024, but the committee still 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 (rather than an enforcement role) are the ETFs for Bitcoin and Ethereum. Are reviews focusing on these ETFs and the companies cooperating with them?'
According to The Wall Street Journal, the U.S. Treasury has set its sights on the largest stablecoin issuer, Tether.
Oppressive regulation is a catalyst for memes. Is Trump's rise a negative for memes?
Castle Island Ventures co-founder Nic Carter expressed on his social platform that the meme coin speculation craze is largely a reaction to the SEC's oppressive regulation. 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 memes is that the SEC does not allow issuers to assign value to tokens, otherwise they would be considered securities that need to be registered.
He stated that under such regulatory conditions, many VC tokens have become meme coins. What should have been equity investments, revenue sharing, and long-term follow-ups have turned into treating projects as memes for speculation.
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 a Republican victory would overturn everything, restore initial coin offerings (ICOs), enable universal airdrops, and other forms of token rationalization. Additionally, they might make fee conversion and token dividends possible. The rationalized U.S. regulations would refocus attention on dApps and other truly important matters in the crypto space, but could also lead to a long-term bear market.
Increased regulation raises operational costs for companies, making the hiring of officials a trend.
To avoid the operational costs brought about by hefty fines, hiring government officials has become a trend among crypto companies.
FOX reporters stated that this year the phenomenon of 'revolving door' at the SEC is particularly evident, with several well-known officials leaving to enter private companies.
Former head of the crypto assets and networks unit Carolyn Welshhans has joined Morgan Lewis, focusing on securities enforcement matters.
Former enforcement department head Gurbir Grewal has joined Milbank Law as a partner, and the firm is currently representing clients like Binance in SEC lawsuits, which were initiated during Grewal's tenure.
Former head of the crypto assets and networks unit David Hirsch has joined McGuireWoods LLP to provide consulting services related to crypto issues and cybersecurity regulations.
Ladan Stewart, who previously sued the SEC against Coinbase and Ripple, has also joined White & Case to help clients deal with SEC enforcement actions related to crypto and other areas.
Apart from appointing officials, the launch of Unichain by Uniswap is a way to respond to regulation. Crypto KOL @_FORAB believes that subsequent DeFi projects with native token staking rewards will likely follow Uniswap's lead in launching their own application chains to avoid regulatory issues related to securities. 'After all, the cost of running a standalone chain is far less than paying fines to the SEC.'
With Gary Gensler's term ending, will crypto regulation welcome a spring?
In a few days, the 2024 U.S. elections will conclude. Whether Trump or Harris wins, SEC Chairman Gary Gensler may resign early, as his term was originally set to end on January 5, 2026.
However, Trump clearly stated at the Bitcoin conference in July that he would fire Gensler, while Harris's team has met with industry insiders, privately indicating they would reset industry relations.
U.S. Congressman French Hill (R-AR) stated in an interview on 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 reports, Gensler's potential successors include two former Commodity Futures Trading Commission (CFTC) chairs from Trump's first term, J. Christopher Giancarlo and Heath Tarbert, the current Chief Legal Officer of Robinhood, Dan Gallagher, who served as an SEC commissioner for two terms, and Paul Atkins, who served as an SEC commissioner during the Bush administration.
From their past statements or regulatory attitudes during their terms, compared to Gensler, almost all have a friendlier stance towards cryptocurrencies.
In addition to hoping for a more lenient attitude from U.S. regulatory agencies, crypto companies need clear regulatory rules. Rather than spending vast resources figuring out how to avoid being sued, crypto firms may prefer to focus on building under clearer regulations.
Consensys sent an open letter to future U.S. presidents last week, requesting clear and supportive regulations for cryptocurrencies and Web3.
SEC Commissioner Mark T. Uyeda recently pointed out that countries in the Indo-Pacific, like Japan, Singapore, and Hong Kong, have established clear frameworks that support innovation while protecting investors. In contrast, the U.S. lacks clear guidelines, leaving market participants facing uncertainty. He will urge the U.S. to take a more proactive stance on crypto regulation.
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