In the last two years, crypto projects and exchanges have had to agree to huge settlements with regulators in the United States. The agency leading in most of these crackdown moves on crypto firms is the US Securities and Exchange Commission (SEC).
The Commodity Futures Trading Commission (CFTC) has also spelled out settlement details for a few digital asset trading firms. As a recap, CoinGecko has listed the top ten crypto settlements scored by US regulators in the last few years.
FTX, Celsius Network, and Terraform Labs Pay Billions of Dollars in Settlements
In 2022, Bahamian-headquartered FTX Derivatives Exchange crashed due to cash mismanagement. Under the leadership of Sam Bankman-Fried, FTX opened up its user deposit to Alameda Research, its sister trading firm. Fraudulent investments eventually led to its implosion, triggering the fall of many other crypto firms.
After several investigations and a bankruptcy proceeding that lasted over two years, the digital currency exchange recently agreed to a settlement of $12.7 billion with the CFTC. This included a $4 billion disgorgement fee and an additional $8.7 billion for restitution.
In July 2023, the Federal Trade Commission (FTC) asked Celsius Network to pay $4.7 billion.
This marked one of the largest settlement amounts in the regulator’s history. The crypto lender and its affiliates were equally banned permanently from offering, marketing, or promoting crypto assets. After over a year in bankruptcy, Celsius emerged from the Chapter 11 process in April.
Terraform Labs’s crash also marked one of the biggest hits of the crypto world in 2022. The exchange’s collapse significantly weighed on the market, erasing over $1 trillion from the broader market cap.
The exchange and its co-founder, Do Kwon, were asked to pay $4.5 billion in civil penalties. Like Celsius Network, Terraform Labs also faced a permanent ban on trading in crypto asset securities after the settlement.
Binance Pays $4.3 Bln in Settlement, Founder Goes to Jail
Almost a year ago, Binance agreed to pay charges levied against it and agreed to pay $4.3 billion.
This sum hinges on resolving the US Department of Justice (DOJ) investigation into a violation related to the Bank Secrecy Act. Binance founder Changpeng Zhao also served a 4-month jail term as part of the broader punishment. He recently left jail after serving his sentence.
Other settlements involved social media networks Telegram ($1.24 billion), Genesis ($2 billion), and Voyager Digital ($1.65 Billion). The trip of BlockFi, Coinbase, and BitMex paid $100 million each in their respective settlement cases.
In BitMex’s case, it agreed to pay the fine to settle regulators in the US. The CFTC and the Financial Crimes Enforcement Network (FinCEN) accused it of unlawfully accepting customers’ funds to trade. The derivatives trading firm also accused it of operating as an unregistered broker.
Crypto.com Sues SEC Over Wells Notice
In recent times, these crypto projects have started taking the fights to regulators in the US.
Earlier this week, Crypto.com sued the SEC after receiving a Wells Notice from the commission. While the Wells Notice is hardly an enforcement move, it signals the strong likelihood of one. The exchange’s move suggests it is not taking a chance with the markets regulator.
With time, countering the actions of US regulators may become the trend amongst crypto exchanges.
