According to reports from Cornerstone Research, the US Securities and Exchange Commission (SEC) has issued penalties worth $2.4 Billion since 2013.  

The US Securities and Exchange Commission (SEC) in a bid to control the cryptocurrency sectors issued its first Time to Sell Your Bitcoin monetary penalty in July 2013 when it filed Case No. 4:13-CV-416. It’s also imposed one of the largest monetary penalties that have occurred in ICO- related enforcement action.

(SEC) is a regulatory agency charged with maintaining decent and standardized security markets while protecting investors against frauds and scams? 

The ICO and cryptocurrency markets have grown vastly.  These markets are international, national, and local, featuring a wide range of investors, traders, and products. Several questions have been put forward as regards the ICO and cryptocurrency markets, as well as their mode of operation. The concerns raised encompassed issues surrounding poor investor protection in the crypto market compared to the conventional securities markets. 

The crypto lending platform, a decentralized finance lender (De-Fi)  and unregistered digital exchange, has been accused of 97 actions of which fifty-eight were litigations thirty-nine were administrative proceedings and the total charge was $2.4 billion. In official writing, the very first monetary penalty was issued by the SEC in July 2013. However, it was noted by Cornerstone Research that these penalties only came to effect in 2017. As a result, SEC only file six crypto cases issued between 2013 and 2017.

SEC primarily has taken regulatory actions which involved specific crypto assets, alleged for the sale of uncataloged securities. Regulatory actions were also brought against lending platforms and crypto exchanges, to help improve SEC’s effort toward enforcement associated with crypto assets.

Furthermore, the SEC charged the promoter with violating the broker-dealer registration provisions of the securities laws because they were not licensed to sell securities, and also charged the promoters with offering and selling unregistered securities, alleging that the lending product offered by BitConnect constituted security. The year 2021 saw major enforcement actions filed. Out of the enforcement actions filed, 80% were against unregistered security offering violations.

In SEC allegations to cryptocurrency platforms, a high percentage of those charges were Firm respondents only while the remaining were individual respondents.

Some of the SEC Regulations Includes:

1. Exchanges may be required to enroll as Broker-Dealers

In September of 2021, Chairman of the SEC, Gary Gensler, during a hearing before the Senate Banking Committee proposed that crypto exchanges must register as securities markets. However, if that’s the case, crypto exchanges registering with the SEC imply that they would be mandated to document all of their trades. 

2. Security trades are rigorously supervised, which means that anyone who sold, issued, and traded any of these digital assets could infringe investment legislation.

3. Even though there are lots of new digital assets to invest in they are liable to securities laws.

4. Any corporate body or individual whose activities relate to any segment of Blockchain and crypto-asset services, must be enrolled by the Commission. This will help the commission to subject such individuals to regulatory actions.

5. Sponsors or issuers are required to fulfill the obligation of verifying that every crypto asset doesn’t make up for securities via a preliminary assessment filing. 

The SEC facilitates extensive public disclosure and monitors corporate takeover actions. That’s not all, the SEC also offers investors protection against manipulative and fraudulent practices. 

The SEC is committed to promoting capital formation while paying more attention to the crypto sector.  SEC will go on to regulate growths in the crypto space and further engage vital stakeholders to establish a regulatory system. This system will help improve economic growth and promote an innovative, safe, and transparent capital market.

Abe Chernin, the Vice President of Cornerstone Research asserted that more stringent measures should be expected in 2022. He believes that with SEC’s constant fixation on this space, further scrutiny should be expected on specific markets. 

At the end of 2021, the commission selected Corey Frayer as a new partner and was charged with the task of instructing the commission in matters to do with cryptocurrencies. The appointment came a few moments after Elad Roisman announced that he will be vacating his position as a bartender of the SEC.