Reviewing the past 5 years of U.S. cryptocurrency enforcement actions: 25 companies reached nearly $32 billion in settlement payments, with FTX and Alameda accounting for a large portion
In the past five years, the settlement amount between cryptocurrency companies and U.S. regulators has reached $32 billion, with the largest amount being $12.7 billion from FTX and Alameda.Author: Coingecko
Compiled by: Felix, PANews
Recently, Coingecko released a research report on cryptocurrency enforcement actions in the United States. This study is based on official announcements from January 1, 2019, to October 9, 2024, examining the monetary value settlements reached between cryptocurrency companies and U.S. regulators in federal and state court cases, excluding charges brought against individuals. Below are the details of the report.
Total Settlements Approaching 32 Billion USD, FTX and Alameda Account for Nearly 40%
The primary cryptocurrency enforcement action undertaken by U.S. regulators is against the bankrupt cryptocurrency exchange FTX and its affiliated trading firm Alameda, which together have paid the largest settlement amount to date of 12.7 billion USD. The lawsuits against FTX and Alameda were led by the Commodity Futures Trading Commission (CFTC), with the settlement agreement announced in August 2024, less than two years after FTX's collapse. Although this ruling does not include the CFTC's lawsuits against individual company executives, the 12.7 billion USD settlement will be used to repay FTX customers and creditors (approximately 11.2 billion USD).
The second largest cryptocurrency enforcement action by U.S. regulators is against the bankrupt cryptocurrency lending institution Celsius (4.7 billion USD), former industry leader Terraform Labs (4.5 billion USD), and the cryptocurrency exchange Binance (4.3 billion USD). Notably, the mid-2022 collapses of Celsius and Terraform Labs marked a key event signaling the shift from a bull to a bear market in the cryptocurrency sector, ultimately leading to the downfall of FTX and triggering a new round of regulatory scrutiny in the U.S.
The settlement with Binance represents a milestone victory for U.S. regulators. Although it ranks fourth in terms of settlement amount, it is the only operational cryptocurrency company to have paid a multi-billion dollar settlement to date. This leading global cryptocurrency exchange agreed to plead guilty in November 2023 to resolve lawsuits with multiple U.S. regulatory agencies, including the Department of Justice (DOJ), the Treasury Department, and the Commodity Futures Trading Commission (CFTC).
Currently, U.S. regulators have undertaken 25 cryptocurrency enforcement actions, with each settlement amount exceeding 10 million USD. Overall, the highest settlement amount reached by U.S. regulators against cryptocurrency companies totals 31.92 billion USD.
Surge in Enforcement Actions Over the Past Two Years, with Settlements Exceeding 19.4 Billion USD This Year Alone
Among the 25 major cryptocurrency enforcement actions in the U.S., 16 settlements were reached in the past two years, reflecting an increase in regulatory scrutiny since the collapse of FTX at the end of 2022. Specifically, U.S. regulators resolved 8 lawsuits in 2023, totaling 10.87 billion USD, setting a historical record, with settlement amounts increasing by 8327.1% compared to the previous year.
Subsequently, U.S. regulators reached another 8 settlements in 2024, valued at 19.45 billion USD, accounting for nearly two-thirds of the total settlement amount. Even with only a few months left in the year, the settlement amount for 2024 has already increased by 78.9% compared to 2023. Given that U.S. regulators show no signs of slowing down their scrutiny of the cryptocurrency industry, 2024 may see more lawsuits and settlement records than last year.
From 2019 to 2022, U.S. regulators won 8 cryptocurrency lawsuit settlements. At the end of 2019, U.S. regulators reached the first significant cryptocurrency lawsuit settlement with Block.one (now renamed B1), the company behind EOS, for 24 million USD.
In 2020, the SEC won two major cryptocurrency lawsuits, with the ICO issuer BitClave reaching a settlement of 29.34 million USD in May, and Telegram settling for 1.24 billion USD regarding the issuance of its Gram tokens under its subsidiary TON Issuer. The 1.24 billion USD Telegram settlement included 1.22 billion USD in illegal proceeds and 18.5 million USD in civil penalties.
During the bull market in 2021, U.S. regulators successfully took three cryptocurrency enforcement actions against well-known industry participants. Stablecoin issuer Tether reached a settlement of 18.5 million USD with the New York Attorney General (NY AG) in February, followed by a 41 million USD settlement with the CFTC in October, claiming that USDT was fully backed by dollar assets. The CFTC also reached a settlement with Tether's parent company Bitfinex, with a lower fine for illegal trading of 1.5 million USD. Meanwhile, cryptocurrency exchanges Poloniex and BitMEX reached settlements of 10.39 million USD and 100 million USD, respectively, in August.
In 2022, the cryptocurrency lending institution BlockFi reached a settlement of 100 million USD with the SEC and the North American Securities Administrators Association (NASAA), while the cryptocurrency exchange Bittrex settled for 29 million USD with the Treasury Department.
