SEC filed the most lawsuits against crypto firms on the eve of the presidential election in 2024

What’s new? According to a report by Cornerstone Research, the US Securities and Exchange Commission (SEC) took 33 enforcement actions against crypto firms in the final year of Gary Gensler’s administration. This figure is 30% below the 2023 high and is the first annual decline since 2021.

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What else is known? Of the 33 lawsuits, half were filed in September-October 2024, ahead of the November 5 presidential election. In total, the SEC filed 25 lawsuits in US district courts and initiated eight administrative proceedings.

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Compared to 2023, the number of lawsuits dropped slightly, while the number of administrative proceedings decreased by more than 50%.

The amount of monetary penalties imposed reached a record high of $4,98 billion, largely due to the proceedings over the collapsed Terra blockchain from Do Kwon’s Terraform Labs.

In 2024, the SEC focused on market manipulation and crypto firms’ lack of registration as broker-dealers, as well as the application of the Howey Test criteria for determining whether a particular cryptocurrency falls within the definition of an investment contract.

“Despite the drop in number of enforcement actions in 2024, cryptocurrency remained a top priority during Chair Gensler’s final year,” noted Simona Mola, the report’s author.

Cornerstone Research intends to keep an eye on how enforcement may change in 2025 in light of the SEC’s recently created cryptocurrency task force.

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The report also compares Gensler’s administration to that of Jay Clayton, SEC chairman during Trump’s first term (May 4, 2017-December 23, 2020).

For example, under Gensler (April 17, 2021-December 31, 2024), the SEC initiated 125 enforcement actions against crypto firms; under Clayton, it initiated 70.

Of these, Chairman Gensler completed 98, and Chairman Clayton completed 50. The Gensler administration recovered $6,05 billion in fines, nearly four times the $1,52 billion under Clayton.

The analysis also found that 66% of all lawsuits under Gensler contained allegations of fraud, compared to 54% under Clayton. Conversely, 71% of Clayton administration actions involved violations in the offering of unregistered securities, compared to 63% under Gensler.