SEC crypto-related enforcements grew exponentially in 2023

investmentnews.com:

Regulatory concerns about cryptocurrency assets – as highlighted by Finra this week – are translating to a record number of enforcement actions by the SEC, according to a new report.

There were 46 enforcement actions taken by the securities regulator against digital asset market participants in 2023, a 53% rise year-over-year and the highest number since the first of its kind in 2013. Last year’s first quarter saw 20 actions taken, a new record for a single quarter.

The report from Cornerstone Research reveals that there were 26 litigations brought by the SEC in U.S. federal courts in 2023, a slight rise from the previous year, while administrative proceedings more than tripled to 20. Settlements reached in the year included $281 million in monetary penalties, bringing the total to the end of 2023 to $2.89 billion.

There were 124 defendants or respondents in 2023, with individuals making up 54% and firms 46%. Just 39% of enforcement actions were only against individuals, down from half in 2022.

“Chair Gensler has noted that ‘enforcement is a tool, not the destination,’ and the number of SEC enforcement actions brought in the crypto space has ramped up over the last two years,” said Simona Mola, the report’s author and a principal at Cornerstone Research. “We will be watching to see what 2024 brings, particularly in light of the SEC’s recent approval of the first bitcoin ETFs.”

Initial coin offerings are a major source of SEC action, accounting for seventeen (37%) of last year’s enforcement actions relating to ICOs, although this is down from the prior year (47%). Allegations of fraud made up 82% of ICO-related actions and 57% of all actions.  

The SEC has seen greater cooperation from those alleged to have breached the