- SEC declares 2023 a “highly productive and impactful year” in cryptocurrency enforcement actions.
- With a focus on the crypto industry, SEC Chair Gary Gensler positions the agency as a vigilant “cop on the beat.”
- Cases like SEC vs. Samuel Bankman-Fried and Terraform Labs reflect the SEC’s commitment to combating fraud.
Amidst speculation surrounding the approval of a Bitcoin spot ETF, the Securities and Exchange Commission (SEC) released a comprehensive report, celebrating a year marked by significant enforcement actions in the cryptocurrency and digital asset space. Let’s take a closer look at what this report reveals.
Upholding Investor Protection
Gurbir S. Grewal, Director of the SEC’s enforcement division, emphasized the importance of urgency and a comprehensive approach in safeguarding investor interests. The SEC’s enforcement initiatives in 2023 involved risk-based strategies, robust remedies, cooperation incentives, whistleblower protection, and the restitution of nearly a billion dollars to harmed investors.
A Surge in Enforcement Actions
This year witnessed a significant increase in SEC enforcement actions related to crypto assets and digital securities, signaling the regulatory body’s intensified focus on policing the crypto industry.
SEC Chair Gary Gensler positioned the agency as a vigilant enforcer, describing it as “a cop on the beat.” Gensler emphasized the SEC’s commitment to following facts and the law to hold wrongdoers in the crypto space accountable.
Prominent Cases and Charges
The SEC filed charges against prominent crypto companies and executives for alleged fraud and failure to register crypto offerings and exchanges. Notable cases included charges against FTX founder Samuel Bankman-Fried, Terraform Labs, and its founder Do Kwon, alleging defrauding investors of billions of dollars.
Crypto companies Celsius, Kraken, Genesis, Gemini, and Nexo faced SEC charges, with Kraken and Nexo paying civil penalties of $30 million and $22.5 million, respectively.
Also, the SEC targeted bad actors in the NFT space, charging Impact Theory LLC and Stoner Cats 2 LLC for conducting illegal, unregistered offerings of crypto asset securities.
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Scrutiny on Celebrity Endorsements
The SEC scrutinized celebrity endorsements of crypto projects in 2023. Reality TV star Kim Kardashian and others faced charges for promoting crypto assets on social media without disclosing payments received. Kardashian agreed to settle the charges by paying $1.26 million.
Lindsay Lohan, NBA star Paul Pierce, YouTube star Jake Paul, musician Soulja Boy, Kendra Lust, Lil Yachty, Ne-Yo, Akon, and Austin Mahone were named in the report for touting crypto asset securities. All but Soulja Boy and Mahone settled the charges.
Overall Agency-Wide Impact
The SEC’s cryptocurrency actions were part of a broader agency-wide effort in 2023, encompassing 784 enforcement actions, $5 billion in financial remedies, and the distribution of nearly $1 billion to harmed investors.
SEC has been highly active in the past couple of years and is taking solid steps to regulate the crypto industry. The battle between crypto companies and SEC is far from over and will continue in the near future.
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