50% Increase in SEC Enforcement Action

T

he Securities and Exchange Commission (SEC) accomplished an astonishing feat in 2021 by bringing forth a majority of crypto-oriented enforcement activities, rising to 50% more than the previous year's count. This is according to Cornerstone Research's recently released report.

Last year, the Securities and Exchange Commission (SEC) delivered a total of 30 crypto-related enforcement actions - second only to 2020. Upon analysis, it was found that the majority of these cases involved fraud or offering unregistered securities. In particular, 70% included allegations involving fraudulent activities whereas 73% were about an unregistered security offering. Not surprisingly, 50% included both accusations altogether!

Last year, some of the most significant legal proceedings included accusations against a former Coinbase employee, alongside his brother and friend for insider trading. In December, another noteworthy case was launched against ex-FTX CEO Sam Bankman-Fried claiming he had perpetrated fraud on investors.  

The SEC Chair, Gary Gensler has specified that a large number of virtual currencies should be categorized as securities. In reaction to this claim, lawmakers have proposed legislation which would set regulations for distinct crypto assets; some bills are aiming towards Commodity Futures Trading Commission control concerning larger digital tokens.

“It seems crypto assets will likely continue to be a priority under the Gensler administration,” Simona Mola, principal at Cornerstone Research and author of the report, noted a 50% increase in enforcement actions and the agency's launch of its Crypto Assets and Cyber Unit.

In an unexpected revelation, Mola disclosed that the SEC's investigations into cryptocurrencies have been bolstered by assistance from external agencies and organizations. Out of 127 regulatory actions taken between 2013 and 2022, 56 were aided by these outside forces, as highlighted in the report.

“Under the Gensler administration, the SEC has been increasingly assisted by multiple international authorities in its cryptocurrency enforcement actions, which is likely a byproduct of the number of U.S. agencies regulating the space in addition to the SEC, but also a byproduct of the increasing complexity of certain cases that often transcend the national borders,” Mola asserted.

By combing the SEC’s enforcement website and applying other approaches, Mola was able to construct a database that consists of all crypto-related regulatory actions between January 1st, 2013 and December 31st, 2022.

Jonathan

An editor at Coincrop

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Jonathan is a Coincrop staff writer based in the UK, covering the best rates for cryptocurrency earning and borrowing products. When not at work, he's likely sailing.