Key Points:
According to the report, the SEC filed 24 lawsuits in federal courts in the United States and six administrative cases in 2022. Particularly, the number of lawsuits rose from 14 the year before.
Initial coin offerings (ICOs) were the subject of 14 of the 30 enforcement actions in 2022, and fraud allegations were included in more than half of these ICO-related enforcement proceedings. Additionally, the SEC filed groundbreaking charges in 2022 relating to insider trading and market manipulation in the cryptocurrency area.
Only in 2020, when the SEC brought 79 such cases, beat last year’s record of 30 crypto-related enforcement actions. Fraud and unregistered were the most often reported claims. 30 enforcement actions were taken, of which 70% involved fraud, 73% an unregistered offering, and 50% both.
Simona Mola, the report’s author and a principal at Cornerstone Research, said:
“Under Chair Gensler, the SEC has sharpened its focus on cryptocurrency lending and trading platforms and decentralized finance platforms. As Chair Gensler has noted, the ‘runway is getting shorter’ for crypto intermediaries to register with the SEC. This could lead to more enforcement actions coming from the SEC’s Crypto Assets and Cyber Unit, which recently expanded its workforce to investigate securities law violations in the crypto markets.”
Indeed, the agency has heavily targeted the majority of crypto companies over the past year, with Gensler that the majority of cryptocurrencies are securities, which has led to backlashes in the community.
The allegations against a former employee of Coinbase, his brother, and a friend for allegedly running an insider trading scam were among the major cases launched last year. Another case was brought in December against former FTX CEO Sam Bankman-Fried for allegedly defrauding investors.
The report adds that the SEC has taken 127 enforcement actions since its first cryptocurrency-related enforcement action in 2013 until the end of 2022, including 82 litigation actions and 45 administrative proceedings against participants in the digital asset market.
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