Terraform Labs' Historic $4.5B Settlement With SEC Makes 2024 The Most Penalized Year For Crypto Firms, Fines Surge More Than 3,000% Over Last Year

The U.S. Securities and Exchange Commission (SEC) hit cryptocurrency entities with record fines in 2024, highlighting the growing financial risk for companies that fail to comply with regulatory standards.

What happened: According to a study released by cryptocurrency analytics firm Social Capital Markets, the regulator has issued over $7.42 billion in fines since 2013, with $4.68 billion, or around 63%, coming this year alone.

The fines issued surged by a whopping 3,018% from last year, when the cryptocurrency industry was fined just over $150 million.

This year’s figures were boosted by the historic $4.47 billion fine against bankrupt company Terraform Labs for defrauding cryptocurrency investors during the infamous Terra LUNA/USD implosion in 2022, the event that precipitated the cryptocurrency bear market. 

This was the largest enforcement action to date, dwarfing prior sanctions and setting a new standard for regulatory monitoring of the cryptocurrency market, the report said. 

Around 11 enforcement actions were carried out by the SEC in 2024, with an average fine of $426 million. For context, the average fine last year was just $5 million across 30 enforcement actions.

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Why It Matters: The pattern of growing fines reflected the SEC’s strategic shift toward large companies and high-profile cases.  

In recent years, the Gary Gensler-led agency has aggressively pursued top cryptocurrency companies.

In June 2023, Binance and its founder Changpeng Zhao were sued by the SEC for allegedly engaging in deceptive tactics, conflicts of interest, and evasion of law.

Around the same time, the agency filed a lawsuit against Coinbase in June, alleging that the exchange was illegally operating as a national securities exchange.

Ripple Labs was fined $125 million last month for violating federal securities laws through its sale of XRP XRP/USD to institutional clients. However, this penalty was much lower than the SEC’s previous request of nearly $2 billion.

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