The U.S. Securities and Exchange Commission (SEC) achieved $8.2 billion in enforcement actions in its fiscal year 2024, marking a significant milestone despite a low number of enforcement actions than.
The agency reported filing 583 cases this year, a 26% decrease from 2023. Still, large financial penalties, especially from high-profile cases like Terraform, have put countermeasures in place. recovered to record levels.
Terraform Labs Responsible for 56% of SEC Enforcement Penalties
The SEC enforcement report states that the $4.5 billion penalty from Terraform Labs represents 56% of this year’s total financial measures. This case, involving the 2022 collapse of Terra/Luna, resulted in the largest money judgment ever secured by the SEC after trial.
Terraform Labs and its CEO, Do Kwon, were found to have defrauded investors in the 2022 Terra/Luna incident. The SEC described the incident as one of the most significant securities frauds in its history. This collapse destabilized the cryptocurrency market, leading to severe investor losses and stimulating greater regulatory scrutiny.
In addition to Terraform, the SEC reached a settlement with crypto-friendly bank Silvergate Capital for false disclosures about its compliance program related to crypto clients, including FTX. BarnBridge DAO was also cited for failing to register its structured crypto assets as securities.
Besides enforcement, the SEC has emphasized its investor protection efforts. This year, the organization distributed $345 million to damaged investors, bringing the total to more than $2.7 billion since 2021.
The agency also handled 45,130 tips, complaints and consultations in 2024, including 24K whistleblower notifications. Whistleblower awards have reached $255 million, underscoring the SEC’s reliance on public cooperation to identify and punish wrongdoing.
Outgoing SEC Chairman Gary Gensler emphasized that these actions highlight the agency’s commitment to investor protection.
“The Enforcement Division is a loyal police force, monitoring events and the law wherever it exists to hold violators accountable,” Gensler additional.
Despite the SEC’s achievements, there have been criticisms of its enforcement strategy. Miles Jennings, decentralization lead at a16z crypto, argues that large financial penalties do not necessarily solve systemic problems in financial markets.
“The SEC measures its success by the amount of fines collected from enforcement actions. While large fines can serve as an apparent form of deterrence and provide a benchmark for performance, they do not reflect whether the SEC is achieving its core mission of deterring conduct. wrongdoing in financial markets or not,” Mr stated.