SEC Rakes in $8.2B in Penalties for 2024, Over Half Tied to Terraform Labs

The U.S. Securities and Exchange Commission (SEC) announced Friday that it secured $8.2 billion in penalties in fiscal year 2024, the highest in its history. 

Over half of the total—$4.5 billion—came from the SEC’s case against Terraform Labs and its founder, Do Kwon, who was liable for the collapse of the Terra blockchain ecosystem.

Without that settlement, the SEC’s financial remedies would have clocked the lowest since 2013, at $3.72 billion, according to a statement.

Terraform Labs, the developer of the Terra blockchain ecosystem, was powered by its algorithmic stablecoin TerraUSD (UST) and its sister token LUNA. 

In May 2022, the ecosystem’s catastrophic $60 billion collapse—triggered by UST losing its dollar peg—left investors devastated and Kwon facing allegations of fraud and regulatory scrutiny.

Crypto Scores Crucial Court Win Against SEC as Gensler Calls It Quits

A federal judge in Texas dealt a decisive blow to the U.S. Securities and Exchange Commission’s crypto policy on Thursday, ruling that the agency’s expansion of an existing securities law to apply to decentralized finance (DeFi) users and projects was unlawful and in excess of the regulator’s authority.  Judge Reed O’Connor granted summary judgment to the Blockchain Association, a crypto lobbying group that sued the SEC in April over the agency’s expansion of the legal definition of the word “de...

Despite a 26% drop in the number of enforcement actions to 583 cases, the SEC’s financial haul soared by 65.5% compared to 2023, the agency said.

While the SEC touts its enforcement as a win for investor protection, the crypto industry is rejoicing over Chair Gary Gensler's imminent departure.

Following Donald Trump’s re-election, Gensler announced he would step down from the top job by January 20, 2025. Trump, who pledged to fire Gensler on his first day in office, promised a more crypto-friendly SEC leadership. 

“The Division of Enforcement is a steadfast cop on the beat,” Gensler said in a statement accompanying the fiscal year results. 

Ripple Labs’ Chief Legal Officer and longtime SEC critic Stuart Alderoty was quick to rebuff the agency’s public announcement.

“The SEC bragging about record fines collected is like a professor boasting about their highest-ever class failure rate and the most cheating scandals,” Alderoty wrote. “It’s not a measure of success—it’s an indictment of oversight gone terribly wrong, driven by perverse incentives.

Crypto firms pay the price

Crypto Industry Bids Farewell to Gary Gensler—Exactly Like You’d Expect

Bitcoin’s price may have topped $98,000 Thursday, but Crypto Twitter was set ablaze for an entirely separate reason: Securities and Exchange Commission (SEC) Chair Gary Gensler, regarded as the industry’s chief antagonist, announced his impending resignation. The figurehead that pursued an aggressive crackdown on the crypto industry signaled that he would resign from his leadership role on January 20, 2025, when Donald Trump takes office for a second term. The disclosure was met with a collectiv...

Many in the industry hope Gensler’s departure marks the end of what they view as his "anti-crypto crusade," spanning nearly four years.

Under Gensler’s leadership, the SEC launched an unprecedented offensive against the crypto sector, targeting high-profile firms.

Silvergate Bank, heavily scrutinized for its ties to the now-defunct FTX exchange, was fined $90 million for misleading investors about its anti-money laundering practices. 

Barnbridge DAO was fined $7 million for selling unregistered securities. Meanwhile, NovaTech Ltd. faced charges for running a $650 million Ponzi scheme that duped over 200,000 investors worldwide.

Smaller scams, such as pre-IPO frauds and pyramid schemes like HyperFund, added hundreds of millions in fines and penalties.

Edited by Sebastian Sinclair