In 2023, the SEC intensified crypto oversight, charging high-profile firms and celebrities, and increased legal actions significantly.
In 2023, the Securities and Exchange Commission (SEC) significantly intensified its oversight of the crypto industry, resulting in a marked increase in enforcement actions. This year, the SEC’s focus on investor protection and market integrity led to over two dozen enforcement actions related to crypto assets and digital asset securities. The agency’s efforts showcased its commitment to ensuring a trustworthy and secure market environment for investors.
Gary Gensler, SEC Chair, highlighted the agency’s role as a vigilant market regulator, emphasizing its determination to uncover and penalize fraudulent activities in the rapidly growing crypto markets. The SEC’s heightened vigilance is a response to the combination of significant market growth and widespread misconduct observed within the crypto sector.
Notably, the SEC pursued legal actions against several high-profile crypto firms and executives. Among the most significant were the charges against FTX founder Sam Bankman-Fried and Terraform Labs, along with its founder Do Kwon. These cases involved allegations of defrauding investors of billions of dollars. These actions underscore the SEC’s commitment to holding industry players accountable for their actions.
SEC’s Impact
The SEC’s assertive stance extended beyond corporate entities to prominent individuals in the entertainment and sports industries. In a groundbreaking move, the agency charged reality TV star Kim Kardashian and several others for promoting crypto assets on social media without proper disclosure of compensation. Most of these celebrities, except for a few, settled the charges, emphasizing the importance of transparency in celebrity endorsements of financial products.
Furthermore, the SEC took action against companies like Celsius, Kraken, Genesis, Gemini, and Nexo. These companies faced charges for various violations, including failure to register crypto asset offerings and exchanges. Kraken and Nexo, as part of their settlements, paid civil penalties totaling $52.5 million.
In addition to targeting major crypto companies and celebrities, the SEC also addressed malpractices in the burgeoning NFT market. The agency charged Impact Theory LLC and Stoner Cats 2 LLC for illegal and unregistered offerings of crypto asset securities, signaling its intent to rigorously police all corners of the digital asset space.
These enforcement actions form a part of the SEC’s comprehensive 2023 agenda, which involved 784 actions across various sectors, imposing financial remedies amounting to $5 billion, and redistributing nearly $1 billion to investors affected by market misconduct.
Amid its heightened enforcement activities, the SEC also drew attention for its ongoing deliberations regarding the approval of a Bitcoin spot ETF. This decision, eagerly anticipated by the crypto community, could significantly impact the landscape of cryptocurrency investments and regulation.
Some believe that the Bitcoin ETF approval is imminent due to the fact that the SEC was already sued once for not approving it and lost the case. Lastly, the institutional backing of Bitcoin ETFs provides more ground facts for the approval to go ahead given that there is common interest among different stakeholders.