SEC’s Regulatory Hammer Falls on Crypto: $7.42 Billion in Fines Since 2013 – Report

The record-breaking $4.67 billion fine against Terraform Labs highlights the SEC's increased focus on enforcing regulatory compliance.

Editor Veronika Rinecker Editor Veronika Rinecker About Author Veronika Rinecker is based in Germany, studied international journalism and media management. She specializes in politics and regulation, energy, blockchain, and fintech. Since 2017, she has been... Author Profile Share Copied Last updated: September 12, 2024 11:35 EDT

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The United States Securities and Exchange Commission (SEC) has stepped up its oversight of the cryptocurrency industry in recent years, aiming to enhance transparency and enforce regulatory compliance.

The SEC has imposed a total of $7.42 billion in fines against cryptocurrency firms and individuals since 2013, with a staggering $4.68 billion levied in 2024 alone, according to a report from Social Capital Markets released on Sept. 11.

A Rising Tide of Fines

In 2024, the SEC significantly escalated its enforcement against cryptocurrency companies and executives.

The government agency imposed $4.68 billion in fines, a dramatic 3,000% increase compared to 2023. However, this surge was driven by a single case: the $4.67 billion fine levied against Terraform Labs and its founder, Do Kwon, for securities law violations related to the collapse of the TerraUSD (UST) stablecoin.

SEC fines by year between 2013-2024. Source: Social Capital Markets

Despite conducting only 11 enforcement actions in 2024 (down from 30 actions in 2023 and 21 actions in 2022), the SEC’s average fine for the year reached a record high of $426 million, according to the report. This increase underscores the SEC’s shift toward fewer but larger fines, with the goal of bringing high-impact enforcement actions that set precedents for the entire industry.

Billions in Fines for Crypto Industry Leaders

In addition to the landmark case against Terraform Labs and Do Kwon, the SEC has also imposed significant fines on other high-profile cryptocurrency companies.

In 2021, the SEC levied a $125 million fine against Ripple Labs, alleging that the company had sold XRP as an unregistered security. The case sparked intense debate within the crypto community, with Ripple arguing that XRP was a digital asset, not a security. The SEC’s action had broader implications for the digital asset landscape, as many other cryptocurrencies were also under scrutiny for potential securities law violations.

Telegram Group Inc. also faced a $1.24 billion fine from the SEC in 2019 for conducting an unregistered offering of its Telegram Open Network (TON) token. The SEC intervened to halt the project, citing violations of securities laws. This case served as a stark warning to other crypto projects seeking to raise funds through token sales, emphasizing the importance of complying with regulatory requirements.

The biggest SEC fines imposed on the crypto industry. Source: Social Capital Markets

SEC Targets Firms and Executives Alike

The SEC’s enforcement actions have not only targeted companies but also their executives.

Since 2020, the SEC has imposed a total of $5.08 billion in fines categorized under “Firm + Individual” penalties, highlighting its focus on penalizing both corporate structures and the decision-makers involved.