If you were to use one word to describe the SEC’s relationship with the crypto market, what would come to mind?
The word that comes to mind is “entanglement”.
The SEC’s new leadership and Wall Street’s positive attitude towards cryptocurrencies was a welcome surprise to many industry supporters, but then the SEC’s latest attitude that “Bitcoin is a highly speculative investment and investors need to be cautious” certainly threw cold water on investors and practitioners and raised concerns about the dynamics. The dramatic shift in the SEC’s approach to the crypto market is not surprising, as the two are still on a path of mutual entanglement, only the end is not yet in sight.
Recently, according to a new report released by Cornerstone Reserarch, the current regulatory efforts of the Securities and Exchange Commission (SEC) on cryptocurrency market participants The SEC’s regulation of cryptocurrency market participants has been increasing year after year.
The report, “SEC Cryptocurrency Enforcement: 2013 Q3-2020 Q4,” found that over the past seven years, the SEC has become one of the leading regulators of cryptocurrencies in the U.S. Between July 1, 2013 and December 31, 2020, the SEC initiated 75 enforcement actions, with more than one-third of the enforcement actions involving allegations of fraud and unregistered securities offerings. . As of March 2021, the SEC has executed over 70% of the enforcement actions, with total fines exceeding $1.77 billion.
This article will provide an overview of the SEC’s cryptocurrency-related enforcement actions and warnings to investors during the period 2013 Q3-2020 Q4.
SEC Crypto Enforcement Begins in 2013 and Thrives in 2017 ICOs
The SEC has been in the eyes of the crypto world since July 2013, when it indicted a man named Trendon T. Shavers for allegedly making fraudulent investments and using bitcoin to set up a Ponzi scheme that yielded large gains.
Overall, from 2013 – the end of 2020, the SEC filed 75 enforcement actions, of which 43 were prosecuted in U.S. District Court and 32 were resolved as administrative proceedings within the SEC.
The following are the number of SEC cryptocurrency enforcement actions and terminated transactions from Q3 2013-Q4 2020.
Figure | 2013 Q3-2020 Q4 SEC Cryptocurrency Enforcement Actions and Number of Terminated Transactions
The SEC’s cryptocurrency enforcement actions began in 2013 and increased significantly in 2017 when the rise of ICOs took hold.
Figure | 2013 Q3-2020 Q4 SEC Enforcement Action Attribution
More than one-third of the enforcement actions related to cryptocurrencies involved allegations of fraud and unregistered securities offerings, with approximately 39 (52%) allegedly involving fraud and 52 (69%) allegedly involving unregistered securities offerings.
Figure|2013 Q3-2020 Q4 Number of cases in which securities were sold with/without fraud
It is noted that the vast majority of litigation cases in administrative proceedings involve fraudulent conduct or the alleged issuance of unregistered marketable securities.
Figure|2013 Q3-2020 Q4 Number of cases in which ICOs were the cause of charges in SEC cryptocurrency enforcement actions
In addition, the report indicates that more than half of all enforcement actions were charged with litigation related to ICOs. For example, an early SEC analysis of DAO tokens reported that the sale of DAO tokens as well as trading should follow U.S. securities laws, indicating that the SEC was intent on bringing ICOs under regulation at the time.
SEC’s Investment Management Division: Avoiding Losses from Speculating in Bitcoin
On May 11, a public statement from its Investment Management Division said that investors interested in investing in bitcoin futures ETFs are strongly encouraged to participate, but to carefully consider risk disclosures and avoid losses due to blind investments.
It said that investors should understand that bitcoin is a highly speculative investment, so investors should consider the volatility of the bitcoin and bitcoin ETF markets, and the possibility of fraud and manipulation due to the lack of regulation in the market, and measure their level of risk-taking.
Previously, the SEC’s new chairman also stated in public that he was neutral on bitcoin, also indicating the SEC’s cautious attitude towards the current crypto market.
It is true that the emergence of the SEC protects investors while also promoting fair competition in the crypto market, and we would certainly like to see the day when we can move from “tying” to “moving forward together”.
Posted by:CoinYuppie，Reprinted with attribution to:https://coinyuppie.com/sec-crypto-enforcement-fines-over-1-7-billion-in-7-years-icos-hardest-hit-by-violations/
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