“Within the final seven years or so, the SEC has established itself as one of many most important regulators policing the cryptocurrency area. As of early March this yr, the SEC has settled over 70% of the enforcement actions for greater than $1.77 billion in whole financial penalties.”
Could 11, 2021
The Securities and Trade Fee has introduced a rising variety of enforcement actions in opposition to digital asset market members, based on a brand new report launched at the moment by Cornerstone Analysis. The evaluation covers SEC enforcement from the primary cryptocurrency-related motion in 2013 by the tip of 2020.
The report,, discovered that the SEC introduced 75 enforcement actions, together with quite a lot of subpoenas and follow-on administrative orders, between July 1, 2013, and December 31, 2020. Defendants and respondents included cryptocurrency issuers, brokers, exchanges, and different service suppliers. Of the 75 enforcement actions, 43 had been litigated in U.S. district courts and 32 had been resolved inside the SEC as administrative proceedings.
“Within the final seven years or so, the SEC has established itself as one of many most important regulators policing the cryptocurrency area,” stated Simona Mola, the report’s writer and a senior supervisor at Cornerstone Analysis. “As of early March this yr, the SEC has settled over 70% of the enforcement actions for greater than $1.77 billion in whole financial penalties.”
The most typical allegations over the examine interval concerned allegations of fraud (52%) and unregistered securities choices (69%). Twenty-eight actions (37%) contained allegations of each fraud and unregistered securities choices.
Greater than half of all enforcement actions alleged unregistered securities providing violations associated to preliminary coin choices, or ICOs. The company’s ICO enforcement exercise heightened in July 2017 because it launched the DAO Report of Investigation, the place the SEC used the Howey take a look at from the U.S. Supreme Courtroom determination of 1946 to find out whether or not a token is an funding contract.
“ICOs have been a frequent goal of SEC enforcement actions, however this can be altering as issuers discover different potential funding sources,” stated Abe Chernin, a Cornerstone Analysis vp and head of the agency’s shopper finance apply. “Whereas the SEC will proceed to deal with fraud, there’s an growing expectation that the brand new administration develop a clearer regulatory method and pursue larger interagency coordination to foster innovation in cryptocurrency markets.”
Along with enforcement actions, the SEC has issued 19 buying and selling suspension orders since 2013.
- In 34 of the 43 litigations that the SEC has introduced to this point, the defendants had been a mixture of people and corporations. In a number of litigations, the defendants had been people solely (seven actions) or corporations solely (two actions).
- In 19 of the 32 administrative proceedings, the respondents had been corporations solely. The SEC charged people solely in six actions, or a mixture of people and corporations in seven actions.
- Between Q3 2013 and This autumn 2020, greater than half of the litigations filed by the SEC had been resolved.
- About half of the 43 actions litigated in U.S. courts occurred within the state of New York, with 18 within the Southern District of New York and 4 within the Japanese District of New York.
About Cornerstone Analysis
Cornerstone Analysis offers financial and monetary consulting and professional testimony in all phases of advanced litigation and regulatory proceedings. The agency works with an in depth community of distinguished college and business practitioners to determine the best-qualified professional for every project. Cornerstone Analysis has earned a status for constant prime quality and effectiveness by delivering rigorous, state-of-the-art evaluation for greater than 30 years. The agency has over 700 employees and places of work in Boston, Chicago, London, Los Angeles, New York, San Francisco, Silicon Valley, and Washington.
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