Despite a decrease in the number of enforcement actions, the U.S. Securities and Exchange Commission (SEC) achieved a significant milestone in its 2024 fiscal year by securing $8.2 billion in financial penalties.
The agency reported that it filed 583 cases, a 26% decrease from the previous year. Nevertheless, the Terraform Labs incident and other high-profile cases were significant contributors to the record financial figures.
Terraform Labs’ $4.5 billion penalty, which constituted over half of the total amount, was a substantial component of the SEC’s total remedies. This case, which resulted from the 2022 Terra/Luna collapse, is the SEC’s largest monetary settlement from a trial. Terraform Labs and its CEO, Do Kwon, were convicted of fraud during the crypto project’s calamitous failure, which caused widespread investor losses and jolted the digital currency market.
In addition to Terraform Labs, the SEC also reached settlements with entities such as Silvergate Capital, which had to pay penalties for failing to disclose accurate information about its crypto-related compliance, particularly in relation to the now-defunct FTX exchange. The SEC also targeted BarnBridge DAO for failing to register its crypto products as securities.
In 2024, the SEC distributed $345 million to harmed investors, bringing its total payout to over $2.7 billion since 2021 as investor protection continued to be a focal point. The agency also processed over 45,000 reports and complaints, including over 24,000 whistleblower submissions, and awarded $255 million in whistleblower compensation.
Some critics contend that the SEC’s approach may not be effectively confronting underlying issues within financial markets, despite the agency’s accomplishments. Miles Jennings of a16z crypto, for example, observed that although substantial penalties are visible deterrents, they may not inherently contribute to systemic change in preventing future malfeasance.
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