作者：CCN, Giuseppe Ciccomascolo
Compiled by: Felix, PANews
Key Takeaways:
The U.S. Securities and Exchange Commission (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 the leadership of Chairman Gary Gensler. The regulator’s cryptocurrency-related enforcement actions in 2023 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. By 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.
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). It is worth noting that 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 44% average from 2013 to 2022. 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: Kraken was charged with operating the Kraken crypto trading platform as an unregistered securities exchange, broker, dealer, and clearing agency. Kraken agreed to stop offering or selling securities through crypto asset staking services or staking programs and 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 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 US SEC filed a lawsuit with 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 US 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 in custody awaiting trial.
Status: In progress
Nexus
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 SEC's 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.和David Chin
Prosecution date: December 21, 2022
Case description: The SEC charged Thor Technologies and its founder David Chin with offering and selling crypto assets designated as “Thor Tokens” without registration. The court ordered Thor Technologies to reimburse $744,555 and pay $158,638.06 in late interest, and ordered the company and David Chin to pay a penalty of $150,000 each.
Status: Finalized
SBF
Prosecution date: December 13, 2022
Case description: Regulators accused Samuel Bankman-Fried (SBF) of 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 robot 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 issued 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 illegal gains and a $125,000 penalty to Keough and Acree respectively.
Status: Finalized
Loci Inc.和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 U.S. Securities and Exchange Commission imposed an asset freeze on Stefan Qin for suspected 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 created optimism for the company. These victories have 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 drawn again. Ripple recently filed a motion to keep certain financial documents and sales data related to the SEC's charges confidential. 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.
