The US Securities and Exchange Commission (SEC) has recently announced that its enforcement actions in fiscal year 2023 have led to substantial fines and reimbursements for investors. In total, the SEC obtained nearly $5 billion from Wall Street brokerages and major players in the cryptocurrency industry through legal actions.
The SEC filed a total of 784 enforcement actions during the year, marking a 3% increase compared to the previous year. This demonstrates the agency’s commitment to holding wrongdoers accountable and protecting the investing public. According to SEC Chair Gary Gensler, “The investing public benefits from the Division of Enforcement’s work as a cop on the beat.”
Enforcement Actions against Major Players
The SEC launched multiple enforcement actions against some of the biggest players in the industry during fiscal year 2023. One notable case involved Sam Bankman-Fried, the co-founder of FTX. The SEC initiated a civil case against Bankman-Fried, but the Department of Justice’s criminal charges against him took precedence over the SEC’s action.
In addition to the case against Bankman-Fried, the SEC also filed lawsuits against other major crypto players, including Binance, its CEO Changpeng Zhao, and Coinbase. Despite these legal actions, all three entities have denied any wrongdoing and have requested the dismissal of the regulator’s cases.
Although crypto-related actions received significant attention due to their high-profile nature, they constituted only a fraction of the SEC’s enforcement division’s workload. Throughout 2023, the agency also reached settlements with leading Wall Street brokerages for their use of unmonitored communication channels and took action against auditors for alleged breaches of audit standards.
Gensler’s Criticism of Crypto Industry
SEC Chair Gary Gensler has been vocal about his concerns regarding the crypto industry’s compliance with securities laws. He has warned that a significant portion of the industry remains non-compliant and has had a destructive impact on investors. Gensler emphasized that these problems could extend beyond the crypto industry and affect the broader financial system.
More recently, Gensler issued a warning about the prevalence of fraud in the crypto space, highlighting the presence of multiple “notorious fraudsters.” He stated, “It’s not just about one circumstance and one notorious fraudster, it’s multiple notorious fraudsters.”
