SEC’s court victory against Terra allowed the regulator to levy a record annual amount of fines

What’s new? In 2024, the amount of fines that the US Securities and Exchange Commission (SEC) collected from companies as a result of lawsuits reached a record high at $8,2 billion. At the same time, the number of lawsuits initiated by the regulator decreased by 26% to 583. This information is contained in the SEC’s report for the fiscal year from October 1, 2023, to September 30, 2024.

SEC report

What else is known? Of the total, $2,1 billion are fines and $6,1 billion are penalties for illegally obtained profits to compensate affected investors.

“The Division of Enforcement is a steadfast cop on the beat, following the facts and the law wherever they lead to hold wrongdoers accountable,” SEC Chair Gary Gensler said in a statement.

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More than half of the total fines for 2024 came from the SEC’s court victory against Do Kwon and his company Terraform Labs, which created the Terra blockchain ecosystem with the UST stablecoin and LUNA token. Terra collapsed in May 2022, causing multi-billion dollar losses to investors around the world. The court found the defendants guilty of fraud and ordered them to pay $4,47 billion.

Terraform Labs had to sell four subsidiaries to cover the fine. In addition, as part of its agreement with the SEC, it will wind down operations. Before closing, the company will perform one last network upgrade before handing over management to the community.

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Without the Terraform Labs regulatory fine, Terraform Labs would have raised only $3,72 billion, its worst result since 2013 ($3,7 billion).

The record year ends Gary Gensler’s nearly four-year tenure as SEC chairman. He will step down on January 20, 2025 — the same day as the inauguration of the 47th President of the United States, Donald Trump.

During his campaign, Trump promised to fire Gensler because, under him, the SEC has pursued an extremely hostile policy toward crypto firms. The commission has refused to develop standards for crypto firms’ operations, saying it will continue to regulate the industry through enforcement actions (filing lawsuits).

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Under Gensler, the SEC filed lawsuits against major crypto exchanges Binance, Kraken, and Coinbase, the developer of one of the most popular non-custodial wallets MetaMask, the TRON blockchain team, and many others. In 2023 alone, the SEC filed 46 lawsuits against crypto firms, a record.

At the same time, crypto firms also filed lawsuits against the SEC. In October, Crypto.com accused the regulator of exceeding its authority and violating the Administrative Procedures Act. In June, Coinbase accused the SEC and FDIC of violating the Freedom of Information Act because they refused to provide data on internal crypto investigations. Earlier this month, the court had already issued an interim ruling in favor of the exchange.

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Since November 21, when Gensler announced his resignation, the XRP token exchange rate has risen 38%. XRP issuer Ripple has been in a legal battle with the SEC since 2020: the regulator accuses the company of unregistered sale of securities. In this case, the penalty amount for Ripple requested by the commissionwas reduced by 94%. After the end of the proceedings, officials appealed the court’s decision and requested its reconsideration.