SEC Secures Record $8.2B in Penalties Despite Fewer Enforcement Actions

In its 2024 fiscal year, the U.S. Securities and Exchange Commission (SEC) reached a major milestone, securing $8.2 billion in financial penalties, despite a decrease in the number of enforcement actions.

The agency reported filing 583 cases, which marks a 26% drop from the previous year. However, high-profile cases, particularly the Terraform Labs incident, contributed to the record financial figures.

A significant portion of the SEC’s total remedies came from the $4.5 billion penalty imposed on Terraform Labs, which accounted for more than half of the total amount. This case, stemming from the 2022 Terra/Luna collapse, marked the SEC’s largest monetary settlement from a trial. Terraform Labs and its CEO, Do Kwon, were found guilty of fraud during the crypto project’s catastrophic failure, which shook the digital currency market and led to widespread investor losses.

In addition to Terraform Labs, the SEC also reached settlements with entities like Silvergate Capital, which faced penalties for failing to disclose accurate information about its crypto-related compliance, particularly concerning the now-defunct FTX exchange. BarnBridge DAO also found itself in the SEC’s crosshairs for not registering its crypto products as securities.

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Investor protection remained a focal point for the SEC, which distributed $345 million to harmed investors in 2024, bringing its total payout to over $2.7 billion since 2021. The agency also processed more than 45,000 tips and complaints, including over 24,000 whistleblower submissions, awarding $255 million in whistleblower payouts.

Despite the SEC’s accomplishments, some critics argue that the agency’s approach may not be effectively addressing deeper issues within financial markets. Miles Jennings from a16z crypto, for instance, noted that while large fines are visible deterrents, they may not necessarily contribute to systemic change in preventing future misconduct.

Kosta Gushterov