Recently, Coingecko released a research report on crypto enforcement actions in the US, based on official announcements from January 1, 2019 to October 9, 2024, examining monetary settlements between crypto companies and US regulators in federal and state court cases, excluding charges against individuals. The following are the details of the report.
Cumulative settlements near $32 billion, with FTX and Alameda accounting for nearly 40%
The main crypto enforcement action by US regulators was against the bankrupt crypto exchange FTX and its affiliated trading company Alameda, which together paid the largest settlement to date of $12.7 billion. The FTX and Alameda litigation was led by the Commodity Futures Trading Commission (CFTC), and the settlement agreement was announced in August 2024, less than two years after the FTX collapse. Although this judgment does not include CFTC's lawsuits against individual company executives, this $12.7 billion settlement will be used to repay FTX customers and creditors (about $11.2 billion).
The second largest crypto enforcement action by US regulators was against the bankrupt crypto lending platform Celsius ($4.7 billion), former industry leader Terraform Labs ($4.5 billion), and crypto exchange Binance ($4.3 billion). It is worth noting that the collapses of Celsius and Terraform Labs in mid-2022 were key events marking the crypto market's transition from bull to bear, ultimately leading to the downfall of FTX and triggering a new round of regulatory scrutiny in the US.
The Binance settlement was a landmark victory for US regulators, although it ranked only fourth in settlement amount, it is the only operating crypto company to date that has paid billions of dollars in settlements. The global leading crypto exchange agreed to plead guilty in November 2023 to resolve lawsuits with multiple US regulators, including the Department of Justice (DOJ), Treasury Department, and CFTC.
Currently, US regulators have taken 25 major crypto enforcement actions, with each settlement exceeding $10 million. Overall, the highest settlement amount by US regulators against crypto companies has reached $31.92 billion.
Enforcement actions have surged in the past two years, with over $19.4 billion in settlements just this year
Of the 25 major crypto enforcement actions in the US, 16 were settled in the past two years, reflecting the intensified regulatory scrutiny since the FTX collapse in late 2022. Specifically, US regulators resolved 8 lawsuits in 2023, totaling $10.87 billion, a historic high and an 8,327.1% increase from the previous year.
Subsequently, US regulators have reached another 8 settlements in 2024, worth $19.45 billion, accounting for nearly two-thirds of the total settlement amount. Even with just a few months left this year, the 2024 settlement amount has already grown 78.9% compared to 2023. Given that there are no signs of US regulators slowing down their scrutiny of the crypto industry, 2024 may see even more settlement records than last year.
Between 2019 and 2022, US regulators won 8 crypto settlement cases. At the end of 2019, US regulators reached the first major crypto settlement with Block.one, the company behind EOS (now renamed B1), with the SEC reaching a $24 million settlement with Block.one.
The SEC won two more major crypto settlements in 2020, with ICO issuer BitClave reaching a $29.34 million settlement in May, and Telegram reaching a $1.24 billion settlement for its TON Issuer subsidiary's Gram token offering, including $122 million in ill-gotten gains and $18.5 million in civil penalties.
During the 2021 bull market, US regulators successfully took three crypto enforcement actions against prominent industry participants. Stablecoin issuer Tether reached a $18.5 million settlement with the New York Attorney General (NY AG) in February, and then a $41 million settlement with the CFTC in October, claiming USDT was fully backed by US dollar assets. The CFTC also reached a settlement with Tether's parent company Bitfinex, with a relatively low fine of $1.5 million for illegal trading.
In 2022, crypto lending platform BlockFi reached a $100 million settlement with the US SEC and the North American Securities Administrators Association (NASAA), while crypto exchange Bittrex reached a $29 million settlement with the Treasury Department.
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