- According to data by blockchain analytics firm Elliptic, unregistered securities account for more than half of all crypto fines levied by US regulators
- The United States Securities and Exchange Commission (SEC) has imposed the greatest monetary penalties for crypto crimes, totaling $1.69 billion, or 67% of all fines
- The Securities and Exchange Commission (SEC) is followed by the Commodity Futures Trading Commission (CFTC), which earned a quarter of the $624 million in fines
Dr. Tom Robinson, Elliptic’s co-founder and Chief Scientist, says in the firm’s June 21 Sanctions Compliance in Cryptocurrencies study that since 2014, US regulators have given out $2.5 billion in fines for crypto-related infractions. Unregistered securities offer an account for more than half of all crypto penalties issued by US authorities, according to research by blockchain analytics firm Elliptic. Unregistered securities offered accounted for $1.38 billion in penalties, or 55.19 percent of all fines imposed, out of a total of $2.5 billion. The report’s second most common crypto infraction was a fraud, which accounted for 37.12 percent of the fines, or $928.
The SEC’s decision on Telegram’s initial coin offering (ICO) in 2020 was the biggest crypto violation on record, with the encrypted messaging service being punished with breaching securities laws through an unregistered ICO that raised $1.7 billion in 2018. Telegram was sentenced to pay disgorgement of $1.2 billion and civil penalties of $18.5 million.
The Control Finance Ltd. Ponzi scheme was the CFTC’s biggest fraud, with the scam’s operator, Benjamin Reynolds, going missing last year until being located and prosecuted in March 2021. The scam resulted in a $429 million civil penalty and $143 million in restitution. Dr. Robinson believes that the crypto sector is not the “wild west” of finance that it is frequently portrayed as in mainstream circles, citing several successful enforcement actions over the years: The examination of crypto asset-related enforcement proceedings in the United States shows that crypto is far from being the financial ‘wild west. Regulators have utilized existing rules to successfully stop and sanction criminal conduct using crypto assets.
The Securities and Exchange Commission (SEC) of the United States has issued the highest monetary penalties for crypto crimes, totaling $1.69 billion, or 67 percent of all fines.
Sanctioned actors are increasingly adopting “privacy currencies, mixers, and privacy wallets to escape detection,” according to Elliptic, as well as decentralized exchange platforms (DEXs) that allow users to trade without having to submit know-your-customer (KYC) information.
The SEC is followed by the Commodity Futures Trading Commission (CFTC), which received 25% of the $624 million in penalties, the Financial Crimes Enforcement Network (FinCEN), which received 7% of the $183 million in penalties, and the Office of Foreign Assets Control (OFAC), which received 2.4 percent of the $606,000 in penalties.
The study also highlights that sanctioned entities are increasingly employing inventive methods to circumvent limitations and get access to cryptocurrencies. Thus, in short, the entire crypto industry, although growing, is yet to become globally recognized as the power of a digital currency.
With a background in journalism, Ritika Sharma has worked with many reputed media firms focusing on general news such as politics and crime. She joined The Coin Republic as a reporter for crypto, and found a great passion for cryptocurrency, Web3, NFTs and other digital assets. She spends a lot of time researching and delving deeper into these concepts around the clock, and is a strong advocate for women in STEM.