Regulatory concerns about cryptocurrency assets – as highlighted by Finra this week – are translating to a record number of enforcement actions by the SEC, according to a new report.
There were 46 enforcement actions taken by the securities regulator against digital asset market participants in 2023, a 53% rise year-over-year and the highest number since the first of its kind in 2013. Last year’s first quarter saw 20 actions taken, a new record for a single quarter.
The report from Cornerstone Research reveals that there were 26 litigations brought by the SEC in U.S. federal courts in 2023, a slight rise from the previous year, while administrative proceedings more than tripled to 20. Settlements reached in the year included $281 million in monetary penalties, bringing the total to the end of 2023 to $2.89 billion.
There were 124 defendants or respondents in 2023, with individuals making up 54% and firms 46%. Just 39% of enforcement actions were only against individuals, down from half in 2022.
"Chair Gensler has noted that 'enforcement is a tool, not the destination,' and the number of SEC enforcement actions brought in the crypto space has ramped up over the last two years," said Simona Mola, the report's author and a principal at Cornerstone Research. "We will be watching to see what 2024 brings, particularly in light of the SEC's recent approval of the first bitcoin ETFs."
Initial coin offerings are a major source of SEC action, accounting for seventeen (37%) of last year’s enforcement actions relating to ICOs, although this is down from the prior year (47%). Allegations of fraud made up 82% of ICO-related actions and 57% of all actions.
The SEC has seen greater cooperation from those alleged to have breached the rules, with self-reporting, cooperation, or remedial efforts undertaken by 52% of the 27 respondents charged in administrative proceedings, while the SEC imposed no monetary penalties because of cooperation in two cases.
Last year also saw the SEC take its first two enforcement actions relating to non-fungible tokens, with allegations that unregistered securities offerings were being conducted using NFTs.
The Supreme Court’s HoweytTest was instrumental in bringing the actions.
"The SEC has continued in 2023 to focus on its implementation of the Howey test," said Abe Chernin, a Cornerstone Research vice president and co-head of the firm's fintech practice. "The SEC has increasingly concentrated on trading platforms for their crypto lending and staking programs or for allegedly failing to register as an exchange, a broker-dealer, and a clearing agency."
The Wall Street giant has blasted data middlemen as digital freeloaders, but tech firms and consumer advocates are pushing back.
Research reveals a 4% year-on-year increase in expenses that one in five Americans, including one-quarter of Gen Xers, say they have not planned for.
Raymond James also lured another ex-Edward Jones advisor in South Carolina, while LPL welcomed a mother-and-son team from Edward Jones and Thrivent.
MyVest and Vestmark have also unveiled strategic partnerships aimed at helping advisors and RIAs bring personalization to more clients.
Wealth management unit sees inflows of $23 billion.
Orion's Tom Wilson on delivering coordinated, high-touch service in a world where returns alone no longer set you apart.
Barely a decade old, registered index-linked annuities have quickly surged in popularity, thanks to their unique blend of protection and growth potential—an appealing option for investors looking to chart a steadier course through today's choppy market waters, says Myles Lambert, Brighthouse Financial.
