Crypto cops record $8.2b in financial remedies for investors: SEC

For all the complaints levied against the crypto-strict U.S. Securities and Exchange Commission (SEC), the agency successfully obtained orders for $8.2 billion in financial remedies for 2024.

This is despite a 26% decrease in total enforcement actions.

The successful prosecution of Terraform Labs helped the agency achieve this milestone. Once a jury verdict found Terraform Labs and founder Do Kwon liable for fraud, defendants agreed to a final judgment ordering them to pay more than $4.5 billion in penalties — the highest amount ever obtained by the SEC following a trial.

It accounted for more than half of the total monetary judgments, according to the details from the press release.

SEC’s 583 enforcement actions

The SEC’s enforcement efforts in 2024 showed significant shifts across multiple categories, with 583 total enforcement actions. This includes 431 stand-alone actions representing a 14% decrease, 93 follow-on administrative proceedings showing a 43% decrease, and 59 delinquent filing actions marking a 51% decline.

Despite the reduced number of cases, the financial impact reached these levels, combining $6.1 billion in disgorgement and prejudgment interest with $2.1 billion in civil penalties.

In the cryptocurrency sector, the SEC pursued several major cases, including charges against Silvergate Capital for misleading BSA/AML compliance disclosures and action against Barnbridge DAO for unregistered securities offerings.

The agency also tackled the HyperFund pyramid scheme involving $1.7 billion and the NovaTech fraud case affecting 200,000 investors. Notable first-time enforcement actions targeted relationship investment scams involving NanoBit and CoinW6 platforms.

The SEC’s Division of Enforcement won all five federal district court cases, including its crypto-related trial against Terraform Labs. This success extended to investor protection measures, with 124 individuals barred from serving as officers and directors of public companies.

SEC Chair Gary Gensler emphasized the Division’s role as a “steadfast cop on the beat,” while Acting Director Sanjay Wadhwa noted increased market participant cooperation and self-reporting. 

The report somewhat justifies Gensler’s role as the top crypto enforcer. The outgoing SEC chair, set to resign on Jan. 20, faced harsh criticism from crypto enthusiasts and retail traders throughout his tenure for his regulatory approach.

And yet, the SEC distributed $345 million to harmed investors and processed a record 45,130 tips, complaints, and referrals, including over 24,000 whistleblower tips, resulting in $255 million in whistleblower awards.

The agency’s success in returning funds to investors has been substantial, with more than $2.7 billion distributed since fiscal year 2021.