Terraform Accounts For Over 50% Of SEC’s 2024 Record $8.2 Billion Enforcement Efforts

The US Securities and Exchange Commission (SEC) announced that it secured $4.5  billion from Terraform Labs in a record-breaking $8.2 billion worth of financial remedies for fiscal year 2024. 

According to a 22 November 2024 press release, Terraform Labs, Hyperfund and NovaTech accounted for 81% of the total recovery which comprised of $6.1 billion in disgorgement along with $2.1 billion in civil penalties.

The #SEC set a new record in fiscal year 2024, collecting $8.2B in fines and penalties (65.57% jump from 2023).

Over half of this total came from the $4.47B settlement with Terraform Labs and #DoKwon, following the 2022 #TerraUSD and #LUNA collapse.

The number of cases… pic.twitter.com/3sIyVCxvla

— TheNewsCrypto (@The_NewsCrypto) November 25, 2024

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Crypto Sector In Spotlight, Terraform Labs Leads Recovery

While enforcements were a part of the agency’s broader effort to ensure compliance, the cryptocurrency sector remained a focal point for the SEC’s enforcement activities. 

A significant portion of the recovery figure was driven by the $4.5 billion judgment against Terraform Labs and its co-founder Do Kwon. The case, involving one of the largest securities frauds in US history, accounted for 56% of the total financial remedies secured.

In January, 2024 the SEC accused HyperFund of running a fraudulent pyramid scheme that raised over $1.7 billion from investors globally. Meanwhile, NovaTech Ltd. faced allegations of operating a fraudulent crypto investment platform, amassing over $650 million from more than 200,000 investors worldwide.

These two cases alone have accounted for over $2.2 billion in investor losses, with operators facing charges for running pyramid schemes disguised as crypto investment platforms.

The SEC also targeted Silvergate Capital, accusing the firm of misleading investors about its compliance programs and its monitoring of high-risk crypto clients like FTX. 

In total, crypto-related enforcement actions accounted for a smaller percentage of cases but led to disproportionately large financial recoveries. High-impact cases, such as those against HyperFund and NovaTech Ltd., have highlighted the agency’s focus on addressing large-scale fraud schemes. 

Social Capital Markets reported a dramatic increase in fines related to crypto cases, up by over 3,000% compared to 2023.

The SEC also continued its crackdown on non-compliance with recordkeeping and marketing rules. Over $600 million in penalties were imposed on firms for recordkeeping violations, including the first cases against municipal advisors.

Similarly, the SEC targeted investment advisers for advertising misleading performance metrics without proper safeguards, resulting in significant settlements.

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SEC’s Record Collections Despite Fewer Actions, Focus On Crypto Firms 

The Commission filed a total of 583 enforcement actions in fiscal year 2024, a 26% drop from the 787 cases filed in 2023. These included 431 stand-alone cases, 93 follow-on proceedings to bar or suspend individuals, and 59 cases targeting companies delinquent in required filings.

According to the report, despite this decline, the financial remedies secured far surpassed prior years with a record breaking $8.2 billion in civil penalties. Was this possible because crypto firms were targeted?

Gary Gensler, Chair of the SEC, who is about to step down post Trump’s victory said “The Division of Enforcement is a steadfast cop on the beat, following the facts and the law wherever they lead to hold wrongdoers accountable.”

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Ripple’s Turning Point, XRP Soars Amid Settlement Speculation

Ripple’s legal saga continued to draw attention, with the community closely monitoring every development. Gensler’s unexpected resignation has added fuel to the fire, sparking debates over its timing and implications. 

Meanwhile, XRP has seen a staggering rally in recent days, surging nearly 200% and reaching a multi-year high of $1.60. The rapid price escalation reflects renewed investor confidence driven by speculation over a Ripple-SEC settlement and broader optimism in the crypto market.

Analysts have highlighted this rally as a pivotal moment, with XRP breaking critical resistance levels and reigniting hopes of a return to its previous all-time highs.

Market watchers speculate that Gensler’s departure could pave the way for fresh leadership at the SEC, potentially shifting its stance on ongoing crypto cases. However, seasoned analysts like Marc Fagel cautioned against immediate conclusions, citing the complexities involved in finalizing a settlement.

Furthermore, Scott Bessent’s appointment as Treasury Secretary has injected a wave of confidence among investors. Known for his pro-crypto perspective, Bessent’s influence could steer the US toward more favorable digital asset policies.

For Ripple and XRP, these developments signify a critical juncture, one that could redefine its trajectory in the evolving regulatory environment.

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