The U.S. Securities and Exchange Commission (SEC) achieved $8.2 billion in financial penalties during the 2024 fiscal year, setting an important milestone despite a decline in enforcement actions.
The agency reported 583 cases this year, a 26% decrease from 2023. However, significant financial penalties in high-profile cases such as Terra/LUNA resulted in record-setting sanctions.
56% of total fines were from Terra/LUNA
The SEC's enforcement report highlighted that the $4.5 billion penalty against Terra/LUNA accounted for 56% of the total financial penalties this year. This case was related to the 2022 Terra/LUNA collapse and was the largest monetary judgment the SEC has ever obtained in a securities fraud trial.
Terraform Labs and CEO Do Kwon were found liable for defrauding investors during the 2022 Terra/LUNA collapse. The SEC described this case as one of the most significant securities fraud cases in history. The collapse destabilized the cryptocurrency market and caused substantial losses to investors, leading to heightened regulatory scrutiny.
In addition to Terra/LUNA, the SEC settled with crypto-friendly bank Silvergate Capital over misrepresentations about its compliance program for cryptocurrency customers. BarnBridge DAO was also charged for failing to register structured cryptocurrency assets as securities.
Beyond enforcement, the SEC emphasized its investor protection efforts. This year, it distributed $345 million to harmed investors, bringing the total to over $2.7 billion since 2021.
The agency also processed 45,130 tips, complaints, and referrals in 2024, with 24,000 coming from whistleblowers. Whistleblower awards totaled $255 million, underscoring the SEC's reliance on public cooperation to identify and punish wrongdoing.
Outgoing SEC Chair Gary Gensler said these actions demonstrate the agency's commitment to investor protection.
"The Enforcement Division is the cop on the beat, following the facts and the law to hold wrongdoers accountable." – Gary Gensler, SEC Chair
Despite the SEC's achievements, critics have voiced concerns about the enforcement strategy. Miles Jennings, the Decentralization Lead at a16z Crypto, argued that large financial penalties may not address systemic issues in financial markets.
"The SEC measures success by the amount of fines it collects from enforcement actions. Large fines can be a visible deterrent and provide a measurable metric of activity, but this does not reflect whether the SEC is fulfilling its core mission of preventing misconduct in financial markets." – Miles Jennings, Decentralization Lead at a16z Crypto
