SEC Intensifies Crypto Crackdown with Record 46 Lawsuits in 2023 despite approving Bitcoin ETFs
Summary:
In 2023, the United States Securities and Exchange Commission (SEC) filed a record 46 lawsuits against cryptocurrency companies, marking a significant increase from the numbers in 2021. Cornerstone Research's report indicated that the SEC issued penalties totaling $281 million that year and tripled administrative proceedings from the previous year. The absence of a clear regulatory framework drew criticism, especially as legal actions against major exchanges like Coinbase, Binance, and others were still pending. Despite this, the SEC green-lighted the listing of shares of spot Bitcoin exchange-traded funds for the first time.
In 2023, a staggering 46 lawsuits against cryptocurrency companies were filed by the United States Securities and Exchange Commission (SEC), over two times the number seen in 2021. On January 24, Cornerstone Research, a consultancy specializing in litigation, revealed in a report that the count of SEC-led prosecution against crypto businesses in 2023 was the peak since 2013. This indicates that digital currencies are now seen as a significant concern by the commission. Of the 46 suits in 2023, Cornerstone found that the SEC had levied penalties totaling $281 million and tripled the volume of administrative trials compared to 2022. Simona Mola, the author of the report from Cornerstone, stated: "Chair Gensler has made it clear that enforcement is an instrument, not the end goal, and the SEC's enforcement efforts in the crypto sector have significantly escalated over the past two years".
In 2021, there were 20 SEC proceedings involving litigation or administrative proceedings, the same year the U.S. Senate ratified Gary Gensler's appointment as chair of the commission. The SEC took 50% more action on cryptos under Gensler in 2022 and this rose to over 53% in 2023.
In its 2023 pursuit of cryptocurrency businesses, the SEC charged two cases related to nonfungible tokens (NFTs) and several involving initial coin offerings. Approximately half of the 108 lawsuits filed since 2013 had been settled in court according to Cornerstone's report. At the time the report was published, cases against major platforms, including Binance, Coinbase, Terraform Labs, Ripple, and Kraken, were still unresolved.
Gensler's method of regulating by enforcement, rather than establishing a transparent structure for companies to abide by in the U.S., has been condemned by several members of the crypto community. Coinbase claimed they had over 30 meetings with SEC officials during a nine-month period prior to facing legal action, without any guidelines being provided.
Nevertheless, despite the upsurge in law enforcement activities, for the first time on January 10, the SEC approved the listing of shares of spot Bitcoin (BTC) exchange-traded funds. Gensler, who made the final decision on the ETF verdict, released a statement the same day, asserting that the commission neither approved nor backed Bitcoin.
Published At
1/24/2024 8:49:11 PM
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