Between July 2013 and December 2020, the SEC initiated a total of 75 enforcement actions and issued 19 trading suspensions against participants in digital asset markets.
Forty-three of the actions were prosecuted in U.S. courts and 32 were resolved as administrative actions within the SEC.
About half of the 43 actions in U.S. courts were in New York State.
In 34 of the 43 cases filed so far, the defendants were a mix of individuals and businesses. In the remaining nine cases, the defendants were individuals only (seven) or companies only (two).
More than half of the disputes initiated during the reporting period (25) have been resolved as of March 5, 2021 for more than $ 1.77 billion in total monetary penalties.
A report released by Cornerstone Research earlier this week shows that the SEC “has established itself as one of the leading regulators engaged in the cryptocurrency space.” The agency initiated a total of 75 enforcement actions, ordered 19 trading suspensions and issued numerous statements (both alone and in conjunction with other regulators) and investor alerts on the matter between July 2013 and December. 2020. Report author Simona Mola noted, “As of early March of this year, the SEC had settled 70% of enforcement actions for more than $ 1.77 billion in total monetary penalties.”
The SEC introduced its first cryptocurrency-related enforcement action in July 2013 with SEC c. Shavers et al., accusing the defendants of defrauding investors in a Ponzi scheme involving Bitcoin. While the SEC’s involvement in cryptocurrency-related actions remained minimal until 2016, trading suspensions increased significantly in 2017, followed quickly by an increase in administrative proceedings and litigation in 2018. The main allegations included fraud, unregistered security offers, failure to register swap offers to non-eligible contract participants, failure to disclose compensation when promoting a security, and failure to register as a broker or exchange.
Of the 75 enforcement actions, 32 were resolved as administrative proceedings within the SEC, and 43 were argued at the district court level. The majority of the disputes involved allegations of both unregistered securities offerings and fraud, while the majority of actions resolved administratively only alleged unregistered securities offers.
Much of the SEC’s historical guidance on the matter, including a 2013 investor alert triggered by the Razors case, accompanied by enforcement measures. In other cases, directives were issued before taking enforcement action. For example, the SEC warned investors against making investment decisions based on celebrity approvals in November 2017 – before charging two celebrities for not disclosing compensation received to promote initial coin offerings. of currency.
Leader in the field
In addition to the amount of actions initiated by the SEC and the guidance it promulgated, the SEC has also established itself as a leader in analyzing the legal status of cryptocurrencies. In July 2017, the SEC released the DAO Investigation Report – in which it used the Howey Test of the 1946 U.S. Supreme Court ruling to determine whether a token is an investment contract. He again used this legal analysis in a December 2017 administrative order terminating an issuer offering coins for failing to register its securities.
In addition, a June 2018 speech by William Hinman, director of the Division of Corporate Finance at the SEC, said that neither Bitcoin nor Ether is a security and contained analysis to separate tokens that are securities from tokens that have a simple consumer utility. This analysis was formalized in April 2019 as part of the SEC’s digital asset investment contract analysis.
Abe Chernin, vice president of Cornerstone Research and head of the company’s consumer credit department, said: “The new administration is increasingly expected to develop a clearer regulatory approach and pursue a greater inter-agency coordination to foster innovation in cryptocurrency markets. ”