SEC Crypto Enforcement Actions: A Look at 20 Major Charges Launched by the SEC

Compiled by: Felix, PANews

Key Takeaways:

• The U.S. Securities and Exchange Commission (SEC) is increasing its enforcement efforts against crypto market participants, taking innovative measures in 2023 46 actions recorded
• Fraud and unregistered securities offerings are the most common accusations, especially against ICOs
• The crypto community is awaiting the outcome of the lawsuit against Ripple

Cryptocurrency enforcement remains a top priority for the U.S. SEC, which, under the leadership of Chairman Gary Gensler, has increased enforcement efforts against cryptocurrency companies and individuals. Cryptocurrency-related enforcement actions by regulators increased by 53% in 2023 compared with 2022.

However, the crypto community’s attention is focused on the US SEC’s ongoing litigation with Ripple, especially in the wake of the latest developments and two major court victories for Ripple.

SEC’s enforcement actions against participants in the encryption field

In 2023, the SEC initiated 46 enforcement actions against cryptocurrency, an increase of 53% from 2022. By the end of 2023, fines against crypto market participants totaled approximately $2.89 billion, of which $281 million came from settlements reached that year.

2013-2023年美国SEC加密货币执法行动、交易暂停、逾期备案和停止运营命令的数量 l 资料来源：SEC

The most common charges 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 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 proportion of enforcement actions targeting individuals rather than companies will fall to 39% in 2023 from 50% in 2022. Additionally, in administrative proceedings, 52% of respondents acknowledged self-reporting, cooperation or remediation efforts, up from the 44% average from 2013 to 2022. In both administrative proceedings, defendants' remediation efforts and cooperation with SEC staff did not result in monetary penalties.

Crypto-Asset and Cyber ​​Enforcement Action

Kraken

Indictment Date: November 20, 2023

Case Description: For unregistered securities transactions Exchanges, brokers, dealers and clearing houses were charged with operating the Kraken crypto trading platform. Kraken agreed to stop offering or selling securities through crypto asset staking services or staking programs and pay a $30 million civil penalty.

Status: Closed

Celsius Network

Time of prosecution: July 13, 2023

Case description: Celsius and its former CEO Alex Mashinsky is accused of violating the registration and anti-fraud provisions of the federal securities laws, including failing to register the offering and sale of Celsius’ crypto lending product, the Earn Interest Program. Celsius is cooperating with the SEC and has agreed to the relief requested in the lawsuit.

Status: In progress

Coinbase

Time of prosecution: June 6, 2023

Case description: The platform was accused of operating in an unregistered country operated its crypto-asset trading platform as a stock exchange, broker-dealer and clearing house and failed to register the issuance and sale of its crypto-asset staking-as-a-service program.

Status: Ongoing

Binance and CZ

Prosecution time: June 5, 2023

Case description: The U.S. SEC filed a lawsuit against A lawsuit was filed in a federal court listing 13 charges against Binance and CZ. Binance is accused of artificially inflating its trading volumes, diverting customer funds, failing to restrict U.S. customers from accessing its platform, and misleading investors about its market monitoring. The SEC also alleged that CZ secretly controlled client assets and mixed and transferred investor funds. Binance agreed to forfeit $2.5 billion and pay a $1.8 billion criminal fine, for a total fine of $4.3 billion. CZ was sentenced to 4 months in prison.

Status: Concluded

Justin Sun and his three wholly-owned companies

Time of prosecution: March 22, 2023

Case description: SEC charges Justin Sun and its companies offered and sold crypto asset securities Tronix (TRX) and BitTorrent (BTT) without registration, and some celebrities were also implicated. Only DeAndre Cortez Way and Austin Mahone paid fines to settle the case.

Status: Ongoing

Terraform Labs and Do Kwon

Indictment date: February 16, 2023

Case description: They are accused of orchestrating Multi-billion dollar fraud involving algorithmic stablecoins and other crypto-asset securities.

Status: Ongoing

Avraham Eisenberg

Time of prosecution: January 19, 2023

Case description: Avraham Eisenberg is accused of manipulating MNGO agents currency, an attack was carried out on the crypto-asset trading platform Mango Markets. Avraham Eisenberg is currently in custody awaiting trial.

Status: Ongoing

Nexo

Time of prosecution: January 19, 2023

Case description: Nexo is accused of failing to register its crypto assets Issuance and sales of loan products Earn Interest Product (EIP). To resolve the SEC's charges, Nexo agreed to pay a $22.5 million fine.

Status: Closed

Caroline Ellison and Zixiao (Gary) Wang

Time of prosecution: December 21, 2022

Case description: Alameda CEO Caroline Ellison and FTX Trading’s former chief technology officer Zixiao Gary Wang are accused of participating in a years-long scheme to defraud FTX investors.

Status: In progress

Thor Technologies, Inc. and David Chin

Time of prosecution: December 21, 2022

Case Description: The SEC charged Thor Technologies and founder David Chin with offering and selling cryptoassets designated as “Thor Tokens” without registration. The court ordered Thor Technologies to pay restitution of US$744,555 and late interest of US$158,638.06, and ordered the company and David Chin to each pay a fine of US$150,000.

Status: Completed

SBF

Time of prosecution: December 13, 2022

Case description: Regulators charged Samuel Bankman-Fried (SBF ) orchestrated a scheme to defraud equity investors in FTX Trading Ltd. (FTX). The case ended with SBF being sentenced to 25 years in prison.

Status: Concluded

Kim Kardashian

Time of prosecution: October 3, 2022

Case description: The internet celebrity was accused of posting on social media Cryptoasset securities offered and sold by Ethereum Max were touted in the media without disclosing the compensation she received for promoting it. Kardashian agreed to settle and pay a $1.26 million fine.

Status: Closed

Bloom Protocol

Time of prosecution: December 13, 2022

Case description: Regulators accused the company of being unregistered To conduct an initial coin offering of crypto-asset securities. Bloom agreed to pay a $300,000 fine.

Status: Concluded

Block Bits

Time of prosecution: April 28, 2022

Case description: SEC accused Block Bits of stealing from more than 20 people Nearly $1 million was raised from investors based on false claims about an automated digital asset trading bot that never ran. The company paid a fine.

Status: Closed

BlockFi

Time of prosecution: February 14, 2022

Case description: BlockFi is accused of failing to register its crypto lending Product distribution and sales. BlockFi agrees to stop offering or selling BIAs in the United States.

Status: Completed

Poloniex

Time of prosecution: August 9, 2021

Case description: Poloniex agreed to pay more than $10 million to Settled charges of operating an unregistered online digital asset exchange.

Status: Closed

Gregory Keough, Derek Acree and his company Blockchain Credit Partners

Time of prosecution: 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 that included disgorgement of a total of $12,849,354 in disgorgement and $125,000 in fines from Keough and Acree.

Status: Closed

Loci Inc. and CEO John Wise

Time of prosecution: June 22, 2021

Case description: From 2017 Between August and January 2018, Loci and Wise raised $7.6 million from investors by offering and selling a digital token called "LOCIcoin." They paid $7.6 million in civil penalties.

Status: Closed

Tierion

Time of prosecution: December 23, 2020

Case description: According to the U.S. Securities and Exchange Commission, Tierion Approximately $25 million was raised in July 2017 through the sale of “Tierion Network Tokens” (TNT). Tierion paid a $250,000 fine.

Status: Closed

Virgil Capital

Time of prosecution: December 22, 2020

Case description: The U.S. Securities and Exchange Commission charged Stefan Qin with Assets were frozen due to securities fraud. Stefan Qin is accused of defrauding investors in 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 dispute between Ripple and the SEC began in December 2020. The SEC accused Ripple of raising more than $1.3 billion by selling XRP as an unregistered security. After years of litigation, the case entered the trial stage in April 2024.

Ripple’s three partial court victories last year have brought optimism to the company. These wins also led to an increase in XRP price. If Ripple wins the case, the value of the asset may be positively affected.

Recently, after a period of relative calm, the battle lines surrounding data access have reopened. Ripple recently filed a motion to keep certain financial documents and sales data confidential in connection with the SEC allegations. The SEC opposed the motion, saying the information was critical to the case.

However, Ripple argued that historical data is irrelevant due to changes in XRP sales. Now, the XRP community eagerly awaits Judge Torres’ ruling on several motions, including the final judgment on the relief phase. Although the case lasted for nearly four years, it was far from over.

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