Key Points
- SEC enforcement actions reach a record $8.2 billion in recoveries.
- Over 50% of total recoveries come from SEC crypto settlements.
- Terraform Labs leads with a $4.5 billion penalty.
- SEC pivots to fewer but higher-impact cases.
The SEC enforcement actions for 2024 have shattered records, reaching a staggering $8.2 billion in recoveries. This historic figure highlights the Securities and Exchange Commission’s intensified focus on tackling financial misconduct, particularly in the cryptocurrency industry.
A significant portion of this total came from SEC crypto settlements, with the standout case involving Terraform Labs.
The blockchain company, co-founded by Do Kwon and Daniel Shin, faced allegations of perpetrating one of the largest fraud cases in cryptocurrency history.
SEC
The collapse of its algorithmic stablecoin TerraUSD (UST) and its native cryptocurrency LUNA led to billions in investor losses.
After a contentious legal battle, Terraform Labs agreed to a $4.5 billion settlement, which alone accounted for over half of the SEC’s total recoveries for the year.
This marked a critical moment in the agency’s mission to enforce accountability in the rapidly growing but often volatile crypto market.
Beyond Terraform Labs, the SEC enforcement actions also targeted other crypto fraud schemes, including HyperFund and NovaTech Ltd.
These platforms presented themselves as legitimate investment opportunities but were later revealed to be fraudulent schemes that raised more than $2.2 billion from global investors.
While NovaTech faces ongoing legal proceedings, HyperFund’s co-founder, Brenda Chunga, opted to settle the charges against her.
SEC nets record $8.2B from enforcement, mostly from Terraform Labs. Without Terraform’s fine, the SEC would have collected $3.72B, which would have been its worst year for financial remedies since 2013. pic.twitter.com/13i6oaGNGc
— cryptothedoggy (@cryptothedoggy) November 25, 2024
Fewer Cases, Bigger Recoveries in SEC Crypto Settlements
While the SEC processed 583 cases in 2024, this represented a 26% decrease from 2023. However, the financial recoveries from SEC enforcement actions skyrocketed, showcasing a strategic pivot by the agency.
Instead of pursuing a high volume of cases, the SEC shifted its focus to high-profile and high-impact actions.
This shift is particularly evident in the realm of SEC crypto settlements. Although the total number of crypto-related cases dropped to 11 in 2024, the penalties associated with these cases surged by over 3,000%, rising from $150 million in 2023 to billions in 2024.
Gary Gensler, the outgoing chair of the SEC, defended this strategy, stating, “Our role is to protect investors by holding wrongdoers accountable and ensuring the integrity of our markets.”
Gensler emphasized that crypto, while full of innovation, also carries significant risks for investors due to its unregulated nature.
Despite criticism of Gensler’s approach—particularly from cryptocurrency advocates who accuse the SEC of stifling innovation—the record-breaking SEC crypto settlements underscore the agency’s commitment to combating fraud in the sector.
SEC Enforcement Actions Undergo Strategic Evolution
The SEC’s record year comes as the agency adopts a new enforcement approach. By prioritizing SEC enforcement actions with broader implications, such as the Terraform Labs case, the SEC aims to send a clear message to bad actors in the financial world.
Under Gensler’s tenure, the SEC has gained a reputation for its aggressive stance on cryptocurrency oversight.
However, this era may be nearing its end. With Gensler set to step down in January 2025, following President Donald Trump’s re-election, the crypto industry is bracing for potential regulatory shifts.
Trump’s campaign included a promise to fire Gensler, signaling a possible reduction in the intensity of SEC enforcement actions against crypto companies.
Many industry leaders are optimistic that the new administration will adopt a more favorable stance toward digital assets, fostering growth while maintaining necessary protections.
The Future of SEC Crypto Settlements
As the SEC transitions to new leadership, its approach to SEC enforcement actions and SEC crypto settlements will likely remain under scrutiny.
The record $8.2 billion recovery in 2024 sets a high bar for future enforcement efforts, especially in emerging sectors like cryptocurrency.
Whether the next chapter of SEC regulation involves more leniency or continues the current aggressive trajectory, one thing is clear: the agency’s actions in 2024 have reshaped the enforcement landscape, leaving a lasting impact on both traditional and digital financial markets.
