SEC's Crypto Enforcement Actions: A Look at 20 Major Charges Filed by the SEC
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SEC's Crypto Enforcement Actions: A Look at 20 Major Charges Filed by the SEC
In 2023, the SEC initiated 46 enforcement actions against cryptocurrency, a 53% increase from 2022.
Navigating Web3 tides with focused insightsWritten by: CCN, Giuseppe Ciccomascolo
Translated by: Felix, PANews
Key Takeaways:
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The U.S. Securities and Exchange Commission (SEC) is intensifying its enforcement actions against participants in the crypto market, taking a record 46 actions in 2023
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Fraud and unregistered securities offerings are the most common charges, particularly related to ICOs
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The crypto community awaits the outcome of the SEC's lawsuit against Ripple
Cryptocurrency enforcement remains a top priority for the U.S. SEC, which under Chairman Gary Gensler has intensified its scrutiny of cryptocurrency companies and individuals. The regulator’s crypto-related enforcement actions in 2023 increased by 53% compared to 2022.
However, the crypto community’s attention is focused on the ongoing litigation between the SEC and Ripple, especially following recent developments and Ripple’s two significant legal victories.
SEC Enforcement Actions Against Crypto Market Participants
In 2023, the SEC initiated 46 enforcement actions related to cryptocurrencies, a 53% increase from 2022. By the end of 2023, total penalties against crypto market participants amounted to approximately $2.89 billion, with $281 million coming from settlements reached that year.
Number of SEC cryptocurrency enforcement actions, trading suspensions, delinquent filings, and cease-and-desist orders, 2013–2023 | Source: SEC
The most common allegations involve fraud and unregistered securities offerings. Of the 46 actions in 2023, 57% involved fraud, 61% involved unregistered securities offerings, and 37% involved both. Additionally, 37% of the actions were related to initial coin offerings (ICOs). Notably, in 2023 the SEC also took two enforcement actions related to NFTs.
In 2023, the proportion of enforcement actions targeting individuals rather than companies dropped to 39%, down from 50% in 2022. Moreover, in administrative proceedings, 52% of respondents acknowledged self-reporting, cooperation, or remedial efforts—higher than the 44% average from 2013 to 2022. In two administrative cases, defendants’ remedial measures and cooperation with SEC staff resulted in no financial penalties.
Enforcement Actions on Digital Assets and Networks
Kraken
Filing Date: November 20, 2023
Case Description: Charged for operating the Kraken cryptocurrency trading platform as an unregistered securities exchange, broker, dealer, and clearing agency. Kraken agreed to cease offering or selling securities through its crypto asset staking service or staking program and to pay a $30 million civil penalty.
Status: Resolved
Celsius Network
Filing Date: July 13, 2023
Case Description: Celsius and its former CEO, Alex Mashinsky, were charged with violating federal securities laws’ registration and anti-fraud provisions, including failing to register the issuance and sale of Celsius’s crypto lending product, the Earn Interest Program. Celsius is cooperating with the SEC and has agreed to the relief measures requested in the lawsuit.
Status: Ongoing
Coinbase
Filing Date: June 6, 2023
Case Description: The platform was accused of operating its digital asset trading platform as an unregistered national securities exchange, broker, and clearing agency, and of failing to register the offer and sale of its crypto staking-as-a-service program.
Status: Ongoing
Binance and CZ
Filing Date: June 5, 2023
Case Description: The SEC filed a lawsuit in a federal court in Washington, D.C., listing 13 charges against Binance and CZ. The allegations include artificially inflating trading volume, misappropriating customer funds, failing to restrict U.S. customers’ access to its platform, and misleading investors about its market surveillance. The SEC also alleged that CZ secretly controlled customer assets and commingled and transferred investor funds. Binance agreed to forfeit $2.5 billion and pay an $1.8 billion criminal penalty, totaling $4.3 billion in penalties. CZ was sentenced to four months in prison.
Status: Resolved
Justin Sun and His Three Wholly-Owned Companies
Filing Date: March 22, 2023
Case Description: The SEC accused Justin Sun and his companies of offering and selling unregistered crypto asset securities Tronix (TRX) and BitTorrent (BTT), with several celebrities allegedly involved. Only DeAndre Cortez Way and Austin Mahone paid fines to settle the case.
Status: Ongoing
Terraform Labs and Do Kwon
Filing Date: February 16, 2023
Case Description: They were accused of orchestrating a multi-billion-dollar fraud involving algorithmic stablecoins and other crypto asset securities.
Status: Ongoing
Avraham Eisenberg
Filing Date: January 19, 2023
Case Description: Avraham Eisenberg was accused of attacking the Mango Markets cryptocurrency trading platform by manipulating the MNGO token. Avraham Eisenberg is currently in custody awaiting trial.
Status: Ongoing
Nexo
Filing Date: January 19, 2023
Case Description: Nexo was accused of failing to register the offer and sale of its crypto asset lending product, the Earn Interest Product (EIP). To resolve the SEC’s charges, Nexo agreed to pay a $22.5 million penalty.
Status: Resolved
Caroline Ellison and Zixiao (Gary) Wang
Filing 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 fraud scheme against FTX investors.
Status: Ongoing
Thor Technologies, Inc. and David Chin
Filing Date: December 21, 2022
Case Description: The SEC accused Thor Technologies and its founder David Chin of offering and selling crypto assets designated as “Thor Tokens” without registration. The court ordered Thor Technologies to disgorge $744,555 and pay $158,638.06 in prejudgment interest, and required both the company and David Chin to each pay a $150,000 penalty.
Status: Resolved
SBF
Filing Date: December 13, 2022
Case Description: The regulator accused Samuel Bankman-Fried (SBF) of orchestrating a scheme to defraud equity investors in FTX Trading Ltd. (FTX). The case concluded with SBF being sentenced to 25 years in prison.
Status: Resolved
Kim Kardashian
Filing Date: October 3, 2022
Case Description: The influencer was accused of promoting EthereumMax’s crypto asset securities on social media without disclosing the compensation she received for the promotion. Kardashian agreed to settle, paying a $1.26 million penalty.
Status: Resolved
Bloom Protocol
Filing Date: December 13, 2022
Case Description: The regulator accused the company of conducting an initial coin offering of crypto asset securities without registration. Bloom agreed to pay a $300,000 penalty.
Status: Resolved
Block Bits
Filing Date: April 28, 2022
Case Description: The SEC accused Block Bits of raising nearly $1 million from over 20 investors based on false statements regarding an automated digital asset trading bot that never operated. The company paid a penalty.
Status: Resolved
BlockFi
Filing Date: February 14, 2022
Case Description: BlockFi was accused of failing to register the offer and sale of its crypto lending products. BlockFi agreed to cease offering or selling BIAs in the United States.
Status: Resolved
Poloniex
Filing Date: August 9, 2021
Case Description: Poloniex agreed to pay over $10 million to settle charges of operating an unregistered online digital asset exchange.
Status: Resolved
Gregory Keough, Derek Acree, and their company Blockchain Credit Partners
Filing Date: August 6, 2021
Case Description: Between February 2020 and February 2021, they offered and sold securities through the DeFi market without registration. The defendants consented to a cease-and-desist order requiring Keough and Acree to jointly disgorge $12,849,354 in ill-gotten gains and pay a $125,000 penalty.
Status: Resolved
Loci Inc. and CEO John Wise
Filing Date: June 22, 2021
Case Description: 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: Resolved
Tierion
Filing Date: December 23, 2020
Case Description: According to the SEC, Tierion raised approximately $25 million in July 2017 by selling “Tierion Network Tokens” (TNT). Tierion paid a $250,000 penalty.
Status: Resolved
Virgil Capital
Filing Date: December 22, 2020
Case Description: The SEC froze Stefan Qin’s assets due to alleged securities fraud. Stefan Qin was accused of deceiving investors in the Virgil Sigma Fund LP since 2018, misrepresenting the fund’s strategy and using proceeds for personal and undisclosed high-risk investments.
Status: Ongoing
Ripple
The legal battle between Ripple and the SEC began in December 2020. The SEC accused Ripple of selling XRP as an unregistered security, raising over $1.3 billion. After years of litigation, the case entered the trial phase in April 2024.
Ripple’s three partial victories in court last year brought optimism to the company. These wins also led to a rise in XRP’s price. If Ripple prevails, the asset’s value could receive a positive boost.
Recently, after a relatively quiet period, the dispute over data access rights has reignited. Ripple recently filed a motion seeking confidentiality for certain financial documents and sales data related to the SEC’s allegations. The SEC opposed the motion, arguing that this information is crucial to the case.
However, Ripple argues that historical data is irrelevant due to changes in XRP sales practices. Now, the XRP community eagerly awaits Judge Torres’s rulings on several pending motions, including the final judgment on remedies. Despite nearly four years of legal proceedings, the case is far from over.
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