SEC Reports Record $8.2 Billion in Penalties for FY 2024

The U.S. Securities and Exchange Commission (SEC) announced Friday that it collected $8.2 billion in penalties during fiscal year 2024, marking the largest financial haul in its history.

Over half of the total—$4.5 billion—stemmed from the SEC’s settlement with Terraform Labs and its founder, Do Kwon, for their role in the collapse of the Terra blockchain ecosystem.

Terraform Labs and the Terra Collapse

Terraform Labs developed the Terra blockchain, which relied on its algorithmic stablecoin TerraUSD (UST) and sister token LUNA.

In May 2022, the Terra ecosystem imploded after UST lost its dollar peg, erasing $60 billion in value and devastating investors worldwide. The SEC accused Terraform Labs and Do Kwon of fraud, leading to a record-breaking settlement.

Without this settlement, the SEC’s financial remedies would have fallen to $3.72 billion—the lowest since 2013.

Enforcement Statistics

Despite a 26% decline in enforcement actions (583 cases in 2024 compared to previous years), the SEC’s financial penalties surged 65.5% from fiscal year 2023.

SEC Chair Gary Gensler framed the results as a victory for investor protection:

“The Division of Enforcement is a steadfast cop on the beat,” Gensler said in the report.

Ripple’s Stuart Alderoty Criticizes the SEC

Not everyone viewed the SEC’s record-setting penalties as a success. Ripple Labs’ Chief Legal Officer, Stuart Alderoty, denounced the agency’s enforcement tactics on X (formerly Twitter):

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

Gensler’s Departure and Trump’s Pro-Crypto Shift

Chair Gary Gensler announced his resignation following Donald Trump’s re-election and is set to leave office by January 20, 2025. Trump has pledged to install a more crypto-friendly SEC leadership, promising a stark departure from Gensler’s policies.

The crypto industry has widely criticized Gensler for what many see as an “anti-crypto crusade” that led to a series of aggressive enforcement actions, including:

• Silvergate Bank: Fined $90 million for misleading investors about its anti-money laundering practices.
• Barnbridge DAO: Penalized $7 million for selling unregistered securities.
• NovaTech Ltd.: Charged with operating a $650 million Ponzi scheme, defrauding over 200,000 investors.
• Smaller cases: Pre-IPO frauds, pyramid schemes like HyperFund, and other scams added hundreds of millions in penalties.

Looking Ahead

The SEC’s record-breaking penalties highlight the agency’s contentious approach to crypto under Gensler’s leadership.

While the SEC touts its enforcement numbers as a win for investor protection, the crypto industry hopes Gensler’s departure marks the end of a turbulent era. With Trump’s pro-crypto administration set to take over, many are anticipating a more balanced regulatory environment that could reshape the future of the digital asset sector.