Original title: (2024 Crypto Settlements Reach Nearly $20 Billion Record High, Will There Be a Regulatory Spring After the Election?)
Original author: flowie, ChainCatcher
Recently, US regulators seem to be rushing to meet performance targets for the upcoming end of the 2024 fiscal year by accelerating their regulatory enforcement efforts in the crypto space.
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 denied this, it still caused some panic in the market.
Throughout October, the SEC has at least charged over 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 were also enforced in conjunction with the FBI and DOJ, with crypto market-making and trading institutions closer to money becoming key targets.
With US regulatory agencies not easing their scrutiny of cryptocurrencies, the number of crypto lawsuits and settlements in 2024 may hit a record high.
The nearly $20 billion in crypto settlements in 2024 is a record high, with leading players becoming key targets.
2024 is expected to be a year of increased regulatory enforcement in the US crypto space. According to Coingecko data, as of October 9, 2024, the total amount of crypto enforcement and settlement funds by US regulatory agencies reached nearly $20 billion, a 78.9% increase over 2023, accounting for nearly two-thirds of the total settlement amount over the past five years. Given that 2024 has not yet ended, and regulatory actions have not slowed, it is expected that this year's crypto litigation and settlement records will surpass those of 2023.
From the SEC's perspective, according to a report updated by social capital markets on October 19, 2024, the SEC imposed fines amounting to $4.68 billion in the crypto sector. Since 2013, the SEC has collected a total of $7.42 billion in fines from crypto companies and individuals, meaning that 63% of the total fines were concentrated in 2024.
The fines in 2024 are expected to increase by 3018% 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, significantly lower than the 30 in 2023.
The SEC's crypto enforcement strategy has clearly shifted, now targeting representative cases and taking more impactful enforcement actions (such as higher fines, more vigorous publicity, etc.) to establish industry precedents.
The SEC's massive fines this year are primarily due to Terra and its co-founder Do Kwon, setting a precedent for SEC enforcement in crypto.
This year, besides Terra, leaders in various crypto sectors have not escaped the SEC's regulatory lawsuits.
In April, DeFi leader Uniswap Labs and ConsenSys received Wells Notices prior to SEC lawsuits, accused of violating securities laws, failing to register as broker-dealers, and participating in the issuance and sale of certain unregistered securities. ConsenSys was officially sued by the SEC on June 28.
On August 28, NFT market leader OpenSea and top crypto exchange Crypto.com also received Wells Notices, being accused of trading NFTs or tokens on their platform that may be considered unregistered securities.
In October, the SEC, along with the FBI and DOJ, took enforcement action against the largest meme market maker Gotbit and accused the leading market maker Cumberland of violating securities laws.
While the market speculates on who the next target of US regulators will be, Fox Business reporter Eleanor Terrett recently stated on X platform that no major crypto players registered with the SEC in 2024, yet the commission still included cryptocurrency in its 2025 review priority list.
Terrett speculates, "The only two crypto assets that have interacted with the SEC in a regulatory (rather than enforcement) capacity are Bitcoin and Ethereum ETFs. Is the review focused on these ETFs and the companies associated with them?"
According to the Wall Street Journal, the US Treasury has set its sights on the largest stablecoin issuer, Tether.
Oppressive regulation is the catalyst for memes; is Trump's presidency bad for memes?
Castle Island Ventures co-founder Nic Carter stated on his social platform that the meme coin speculation craze is largely a response 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 meme boom is that the SEC doesn't allow issuers to assign value to tokens; otherwise, they would need to register as securities.
He stated that under such regulatory circumstances, 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.
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 will overturn everything, restoring Initial Coin Offerings (ICOs), implementing universal airdrops, and other forms of token rationalization. They may also enable fee conversions and token dividends. Furthermore, rational regulation in the US would refocus cryptocurrency attention on dApps and other genuinely important matters, but it could also lead to a long-term bear market.
Increased regulation raises operational costs for businesses, and hiring officials has become a trend.
To avoid the operational costs brought by massive fines, hiring government officials has become a trend for crypto companies.
FOX reporters noted that this year, the SEC's "revolving door" phenomenon has been particularly evident, with several well-known officials leaving to join private firms.
Former head of the crypto assets and networks division, Carolyn Welshhans, has joined Morgan Lewis to focus on securities enforcement matters.
Former enforcement division chief Gurbir Grewal has joined Milbank Law as a partner, and the firm is currently representing clients like Binance in SEC lawsuits initiated during Grewal's tenure.
Former head of the crypto assets and networks unit David Hirsch has joined McGuireWoods LLP to provide clients with consulting services related to crypto matters and cybersecurity regulations.
Ladan Stewart, who previously filed lawsuits against Coinbase and Ripple, has joined White & Case to help clients navigate SEC enforcement actions related to crypto and other fields.
In addition to hiring officials, Uniswap's launch of Unichain is, to some extent, a way to respond to regulation. Crypto KOL @_FORAB believes that future DeFi projects with native token staking rewards will likely follow Uniswap's lead and launch their own application chains to avoid regulatory securities issues. "After all, the cost of running a standalone chain is much less than paying fines to the SEC."
With Gary Gensler's term ending, will crypto regulation welcome spring?
In a few days, the 2024 US elections will conclude. Whether Trump or Harris wins, SEC Chairman Gary Gensler may resign early, his term was originally set to end on January 5, 2026.
However, Trump made it clear at the Bitcoin conference in July that he would fire Gensler, while Harris's team has met with crypto insiders and privately indicated they would reset 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, 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 Dan Gallagher, who previously served as SEC Commissioner, and Paul Atkins, who served as SEC Commissioner during the Bush administration.
Based on their past statements or regulatory attitudes during their terms, almost all have a more favorable view of cryptocurrency compared to Gensler.
Beyond hoping for a softening of US regulators' attitudes, crypto companies need clear regulatory rules. Instead of spending vast resources thinking about how to avoid being sued, they may prefer to focus on building under clearer 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 established clear frameworks that support innovation while protecting investors. In contrast, the US lacks clear guidelines, creating uncertainty for market participants. He will urge the US to adopt a more proactive approach in crypto regulation.
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