June 21, 2024
Crypto

Allegations in SEC Cryptocurrency Enforcement Actions | Cornerstone Research


  • Of the 46 enforcement actions in 2023:
    • 26 actions (57%) alleged fraud under Section 17(a) of the Securities Act and/or Section 10(b) and Rule 10b-5 of the Exchange Act;
    • 28 (61%) alleged an unregistered securities offering violation under Sections 5(a) and 5(c) of the Securities Act;
    • 17 (37%) contained both allegations.
  • In addition, an increased number of actions were brought alleging unlawful promotion of securities, market manipulation, or failure to register as a broker-dealer and/or an exchange.
  • In eight separate actions, the SEC charged nine celebrities under Section 17(b) of the Securities Act for allegedly touting crypto-asset securities without disclosing that they received compensation.1
  • In eight actions, the SEC alleged failures to register as a broker or dealer under Section 15 of the Exchange Act and/or as an exchange under Section 5 of the Exchange Act.2 In five of the eight actions, the SEC also alleged violations of Section 17A(b) of the Exchange Act for failure to register as a clearing agency.3
  • In connection with the offer and sale of crypto-asset securities, the SEC alleged market manipulation under Section 9(a)(2) of the Exchange Act in four actions against six firms and five individuals.4

In 2023, the most frequent allegations in cryptocurrency-related enforcement actions continued to be fraud and unregistered securities offerings.

Figure 3: Number of SEC Cryptocurrency Enforcement Actions by Type of Allegations 2013–2023

Source: SEC.gov

Note: The figure focuses on the total of 173 SEC cryptocurrency enforcement actions (both litigations and administrative proceedings). An enforcement action may be associated with more than one allegation. “Other Allegations” include claims that have been alleged in only a few litigations or administrative proceedings, such as violations of restricted period, failure to register as an investment company, fraudulent transactions by investment advisers, failure to maintain internal controls, and falsification of internal controls.

1Administrative Proceeding Order, In the Matter of Paul Anthony Pierce, February 17, 2023; Administrative Proceeding Order, In the Matter of Aliaune Damala Badara Akon Thiam, March 22, 2023; Administrative Proceeding Order, In the Matter of Jake Joseph Paul, March 22, 2023; Administrative Proceeding Order, In the Matter of Shaffer Chimere Smith, March 22, 2023; Administrative Proceeding Order, In the Matter of Lindsay Dee Lohan, March 22, 2023; Administrative Proceeding Order, In the Matter of Miles Parks McCollum, March 22, 2023; Administrative Proceeding Order, In the Matter of Michele Anne Mason, March 22, 2023; Complaint, SEC v. Justin Sun et al., 1:23-cv-02433 (S.D.N.Y.), March 22, 2023.

2Administrative Proceeding Order, In the Matter of Brian Bartlett Amoah and Elbert “Al” Elliott, September, 26, 2023; Complaint, SEC v. Green United LLC et al., 2:23-cv-00159 (D.Utah), March 3, 2023; Complaint, SEC v. Beaxy Digital, LTD et al., 1:23-cv-01962 (N.D.Ill.), March 29, 2023; Complaint, SEC v. Bittrex, Inc. et al., 2:23-cv-00580 (W.D.Wa.), April 17, 2023; Complaint, SEC v. Binance Holdings Limited et al., 1:23-cv-01599 (D.D.C.), June 5, 2023; Complaint, SEC v. Coinbase, Inc. and Coinbase Global, Inc., 1:23-cv-04738 (S.D.N.Y.), June 6, 2023; Complaint, SEC v. Digital Licensing Inc. et al., 2:23-cv-00482 (D. Utah), July 26, 2023; Complaint, SEC v. Payward Inc. (d/b/a Kraken) and Payward Ventures Inc. (d/b/a Kraken), 3:23-cv-06003 (N.D.Cal.), November 20, 2023.

3Complaint, SEC v. Beaxy Digital, LTD et al., 1:23-cv-01962 (N.D.Ill.), March 29, 2023; Complaint, SEC v. Bittrex, Inc. et al., 2:23-cv-00580 (W.D.Wa.), April 17, 2023; Complaint, SEC v. Binance Holdings Limited et al., 1:23-cv-01599 (D.D.C.), June 5, 2023; Complaint, SEC v. Coinbase, Inc. and Coinbase Global, Inc., 1:23-cv-04738 (S.D.N.Y.), June 6, 2023; Complaint, SEC v. Payward Inc. (d/b/a Kraken) and Payward Ventures Inc. (d/b/a Kraken), 3:23-cv-06003 (N.D.Cal.), November 20, 2023.

4Complaint, SEC v. Avraham Eisenberg, 1:23-cv-00503 (S.D.N.Y.), January 20, 2023; Complaint, SEC v. Justin Sun et al., 1:23-cv-02433 (S.D.N.Y.), March 22, 2023; Complaint, SEC v. Celsius Network Limited et al., 1:23-cv-06005 (S.D.N.Y.), July 13, 2023; Complaint, SEC v. SafeMoon LLC et al., 1:23-cv-08138 (E.D.N.Y.), November 1, 2023.

The views expressed herein are solely those of the authors and do not necessarily represent the views of Cornerstone Research.



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