The crypto industry experienced significant growth in 2024, reaching new investors and new highs. While the launch of spot exchange-traded funds dominated early 2024 headlines, Trump’s re-election sent Bitcoin prices past $100,000 amid hopes that the new administration would lighten regulations on digital assets.
Despite this optimism, SEC crypto enforcement actions remained a focal point, as the Securities and Exchange Commission (SEC) continued cracking down on crypto firms. While the number of SEC crypto enforcement cases declined compared to 2023, the agency levied a record $8.2 billion in fines, signaling that compliance remains a key concern for the industry.
This article explores the SEC’s crypto enforcement actions, ongoing disputes over digital securities, and what to expect in 2025 and beyond.
SEC Crypto Enforcement Actions in 2024: What Happened?
The SEC issued just 13 crypto enforcement actions in 2024, a significant decline from the nearly 50 actions in 2023. However, the agency levied $8.2 billion in fines on 583 crypto projects—a sharp increase from the $280 million in 2023 fines. Of course, most came from the $4.5 billion settlement with Terraform Labs.
Fraud Cases Take Center Stage
The digital nature of crypto assets and their price volatility make them a target for fraudsters, leading to multiple SEC crypto enforcement actions against Ponzi schemes, rug pulls, and other illicit activities.
Read next: how to avoid rug pulls
Some of the most notable cases included:
- SEC v. Lee, et al. The HyperFund raised more than $1.7 billion between 2020 and 2022, guaranteeing investors high returns. But in 2022, the scheme collapsed, and investors could no longer make withdrawals.
- SEC v. Sewell and Rockwell Capital Management. The American Bitcoin Academy encouraged hundreds of students to invest in the Rockwell Fund, which received about $1.2 million from 15 students. However, the fund never launched, and the money was eventually stolen when Sewell’s digital wallet was hacked.
- SEC v. Sanchez, et al. CryptoFX claimed to trade in crypto assets and foreign exchange markets but was actually a Ponzi scheme. After raising $300 million, the fund used most of the money to pay commissions and bonuses to the founders and a handful of promoters before collapsing.
- SEC v. Nadar Al-Naji et al. Nadar Al-Naji launched BitClout as a social media platform and raised $257 million in a token sale. After promising not to compensate himself for BitClout employees, he spent more than $7 million in investor funds on rental payments for a Beverly Hills mansion and gifts for friends and family.
- SEC v. NovaTech et al. Between 2019 and 2023, Cynthia and Eddy Petion operated a multi-level marketing scheme known as NovaTech. The scheme raised over $650 million, largely from the Haitian American community. Instead of trading, the proceeds paid the founders, a handful of investors, and promoters.
- SEC v. Adams Brothers. Jonathan Adam and Tanner Adam raised $60 million from 80 investors nationwide, promising 13.5% monthly returns using trading bots. Instead, they spent the money on their own lavish lifestyle, including payments on a Miami condo and $480,000 worth of vehicles.
- SEC v. Geosyn Mining. Geosyn raised $5.6 million from more than 60 investors promising to mine and distribute crypto assets to investors. However, the company never purchased mining machines and did not provide the advertised service. Instead, the founders misappropriated $1.2 million for personal use and paid $354,500 to investors as purported profit distributions despite never mining tokens.
These cases demonstrate how SEC crypto enforcement actions continue to focus on fraudulent activities, aiming to protect investors from scams and financial losses.
Securities Disagreements
Most people agree that the SEC should pursue fraudsters, but the agency’s insistence that every token is a security has drawn considerable scrutiny. The industry’s distaste for these actions led to the Fairshake super PAC, which contributed to Trump’s victory and efforts to replace key members of Congress intent on suppressing crypto.
Significant SEC crypto enforcement cases in this area included:
- SEC v. TradeStation Crypto. TradeStation launched a crypto lending product in August 2020, marketing it as a way to put crypto assets to work. In addition to forcing the shutdown of the lending product, the company paid a $1.5 million fine.
- SEC v. ShapeShift AG. ShapeShift marketed itself as a crypto vending machine, enabling customers to exchange about 80 assets for which it served as a counterparty. The SEC assessed a $275,000 penalty for operating as an unregistered securities dealer.
- SEC v. Consensys Software. Consensys Software, the maker of MetaMask, was charged with making an unregistered securities offering and operating as an unregistered broker after launching its MetaMask Staking and MetaMask Swaps products.
- SEC v. Plutus Lending LLC. The SEC charged Plutus Lending with operating an unregistered investment company after it accumulated nearly $600 million in assets and paid interest on those assets.
- SEC v. Cumberland DRW. The SEC charged Cumberland DRW with operating as an unregistered dealer, offering and selling more than $2 billion in crypto assets as securities.
With SEC crypto enforcement actions targeting major crypto firms, the industry continues to challenge the agency’s authority over digital assets, pushing for clearer regulations.
Fines & Penalties
Beyond its new caseload, the SEC collected a record amount of fines and penalties from the crypto industry throughout 2024. Most notably, the SEC announced that Terraform Labs and Do Kwon agreed to pay more than $4.5 billion following a unanimous jury verdict holding them liable for orchestrating a years-long fraud involving crypto assets.
In addition to Terraform, Ripple was ordered to pay $125 million for the unregistered securities offering of its XRP token, and Binance received a $50 million fine for violations of anti-money laundering laws.
What’s Next for SEC Crypto Enforcement in 2025?
The SEC crypto enforcement will undergo significant changes under the Trump administration. While Chairman Gary Gensler has harshly criticized the crypto industry, incoming Chairman Paul Atkins is known for his pro-business and crypto stance. He currently serves as the CEO of Patomak Global Partners, which has several clients in the crypto industry.
At the same time, Atkins previously served as an SEC Commissioner between 2002 and 2008. While this means he has experience at the agency and will continue to prosecute fraud across the financial sector, critics argue that his tendencies toward deregulation may have contributed to the issues leading up to the 2008 financial crisis.
The Bottom Line
Although SEC crypto enforcement actions decreased in 2024, the fines imposed were at an all-time high. The backlash against SEC policies played a role in Trump’s election victory, and with a new pro-crypto SEC Chairman, the industry could see significant regulatory changes.
If you trade crypto, ensuring compliance is essential. ZenLedger helps investors manage their crypto taxes by aggregating transactions, calculating gains and losses, and generating the necessary tax paperwork.
The above is for general info purposes only and should not be interpreted as professional advice. Please seek independent legal, financial, tax, or other advice specific to your particular situation.
