The U.S. Securities and Exchange Commission (SEC) significantly escalated its policing of the crypto sector in 2023. The commission carried out 46 enforcement actions, representing a 53% year-over-year increase.
According to a new report from litigation consulting firm Cornerstone Research, the fleet of cases targeting crypto firms and individuals was the highest annual total for the SEC since 2013.
Key Takeaways:
- 46 crypto cases in 2023, up 53% versus 2022.
- $281 million in total fines were imposed.
- 82% involved fraud charges.
- 37% targeted unregistered ICO securities.
- Administrative proceedings tripled.
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The report reveals that a substantial 82% of last year’s crypto enforcement contained fraud charges. Another key focus was prosecuting unregistered securities from initial coin offerings (ICOs), which accounted for over a third of cases.
In total, the sweeping actions from Chairman Gary Gensler’s agency penalized 124 entities, with 46% being companies and 78% being individuals.
SEC Moved to First NFT Cases
2023 also marked the SEC’s move into the NFT sphere. The commission charged the creators of an NFT-funded web series with illegally raising $8 million from token sales.
While most cases still revolve around token issuances, the agency is aggressively expanding its reach across business models under its expanded authority.
According to former SEC official John Reed Stark, cited in the report, 2024 may see an influx of exchange enforcement as well, given that most currently operate without regulatory supervision.
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SEC Chairman Gensler has firmly ramped up the scrutiny of the cryptocurrency industry. However, industry experts are slamming Gensler’s regulatory approach and the lack of a regulatory framework.
Nevertheless, the commission had recently approved the much-awaited spot Bitcoin ETF applications. However, Gensler was quick enough to release cautionary warnings about the risks associated with cryptocurrencies.
