In summary
- The SEC collected a record $8.2 billion in fines in 2024, fueled by the $4.5 billion Terraform Labs and Do Kwon case.
- Without this case, the fines would have been the lowest since 2013, at $3.72 billion.
- The Terra collapse in 2022, which destroyed $60 billion in value, remains one of the biggest disasters in crypto.
The U.S. Securities and Exchange Commission (SEC) announced Friday that it secured $8.2 billion in fines in fiscal year 2024, the highest figure in its history.
More than half of the total—$4.5 billion—came from the SEC’s case against Terraform Labs and its founder, Do Kwon, who was responsible for the collapse of Terra’s Blockchain ecosystem.
Without that deal, the SEC’s financial measures would have hit the lowest since 2013, at $3.72 billion, according to an SEC statement.
Terraform Labs, the developer of the Terra blockchain ecosystem, was powered by its algorithmic stablecoin TerraUSD (UST) and its sister token LUNA.
In May 2022, the catastrophic $60 billion collapse of the ecosystem, triggered by UST’s loss of dollar anchoring, left investors devastated and Kwon facing accusations of fraud and regulatory scrutiny.
Despite a 26% decline in the number of enforcement actions to 583 cases, the SEC’s financial haul soared 65.5% compared to 2023, the agency said.
As the SEC touts its compliance as a victory for investor protection, the Cryptocurrency industry is celebrating the impending departure of Chairman Gary Gensler.
Following Donald Trump’s re-election, Gensler announced that he would step down from the top job by January 20, 2025. Trump, who promised to fire Gensler on his first day in office, promised more cryptocurrency-friendly SEC leadership.
“The Compliance Division is a tough cop on the street,” Gensler said in a statement accompanying the fiscal year results.
Ripple Labs Chief Legal Officer and longtime SEC critic Stuart Alderoty was quick to criticize the agency’s public announcement.
“The SEC bragging about record fines collected is like a professor bragging about its highest failure rate and biggest cheating scandals,” Alderoty wrote. “It is not a measure of success, it is an indication of oversight gone horribly wrong, driven by perverse incentives.
Cryptocurrency firms pay the price
Many in the industry hope that Gensler’s departure marks the end of what they consider his “anti-crypto crusade,” which spanned nearly four years.
Under Gensler’s leadership, the SEC launched an unprecedented crackdown on the cryptocurrency sector, targeting high-profile firms.
Silvergate Bank, which came under heavy scrutiny for its ties to the now-defunct cryptocurrency exchange FTX, was fined $90 million for misleading investors about its anti-money laundering practices.
Barnbridge DAO was fined $7 million for selling unregistered securities. Meanwhile, NovaTech Ltd. faced charges for running a $650 million Ponzi scheme that deceived more than 200,000 investors worldwide.
Smaller scams, such as pre-IPO fraud and pyramid schemes like HyperFund, amounted to hundreds of millions in fines and penalties.
Edited by Sebastian Sinclair
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