$6 Billion in Crypto Penalties Imposed

The US Securities and Exchange Commission (SEC) significantly ramped up cryptocurrency enforcement actions under Chair Gary Gensler’s administration.

Recent reports indicate Gensler’s tenure saw crypto enforcement actions outpace the efforts of his predecessor, Jay Clayton, by a stark 80%. This aggressive enforcement season was marked by intensified scrutiny and record-breaking penalties totaling $6.05 billion, nearly quadrupling the $1.52 billion imposed during Clayton’s tenure.

Crypto Enforcement Actions Soared 80% in Gensler’s Tenure

Cornerstone Research indicates the SEC initiated 125 crypto-related enforcement actions during Gensler’s tenure, spanning April 2021 to December 2024. This represents an 80% increase compared to 70 actions under Clayton’s leadership between 2017 to 2020.

Specifically, the report highlights 33 crypto-related enforcement actions in 2024, a 30% decline from the 2023 peak. This marked the first year-over-year drop in enforcement since 2021. Despite the decrease in the number of actions, monetary penalties surged to a record $4.98 billion.

A single multi-billion-dollar settlement of $4.3 billion from Binance and Changpeng Zhao’s $50 million penalty in April contributed the lion’s share of this.

Notably, half of the enforcement actions in 2024 occurred in September and October, just before the US presidential election in November. This suggests a strategic push to solidify regulatory stances during Gensler’s final months as chair. The SEC filed 25 litigations in US district courts and initiated eight administrative proceedings in 2024. Administrative cases saw a 50% decline compared to 2023.

Further, Cornerstone Research’s analysis revealed that 66% of enforcement actions under Gensler’s administration contained allegations of fraud, compared to 54% under Clayton. Conversely, violations of unregistered securities offerings were slightly more common under Clayton (71%) than Gensler (63%).

Mixed Reception to Gensler’s Legacy

Gensler’s administration emphasized the application of the Howey Test to determine whether digital assets qualify as securities. He cracked down on alleged market manipulation and failures to register as broker-dealers.

Despite these milestones, Gensler’s tenure has not been without criticism. Industry executives, such as Coinbase CEO Brian Armstrong, have voiced frustration with what they see as excessive and often “frivolous” enforcement actions.

“The next SEC chair should withdraw all frivolous cases and issue an apology to the American people. It would not undo the damage done to the country, but it would start the process of restoring trust in the SEC as an institution,” Armstrong posted.

Critics also argue that these relentless crackdowns stifle innovation and drive crypto firms to seek friendlier regulatory environments overseas. Many point to the SEC’s handling of key lawsuits as emblematic of a broader trend toward overreach. Others claim the agency prioritized punitive measures over constructive regulation.

The broader cryptocurrency ecosystem has also felt the weight of heightened regulatory pressure. For instance, blockchain company Consensys recently laid off 20% of its staff. Its CEO, Joseph Lubin, cited escalating scrutiny from the SEC as a contributing factor.

“The broader macroeconomic conditions over the past year and ongoing regulatory uncertainty have created broad challenges for our industry, especially for US-based companies,” Lubin shared on X (formerly Twitter).

Nevertheless, the SEC has transitioned to new leadership in 2025 following Gensler’s resignation and Mark Uyeda’s ascension as interim chair. The cryptocurrency industry is bracing for potential shifts in enforcement priorities. The SEC has announced the formation of a dedicated crypto task force, signaling that digital assets will remain a focal point.

However, stakeholders are hopeful for a more balanced approach. While fostering innovation is key, addressing legitimate concerns about fraud and market manipulation is also vital. Cornerstone Research Vice President Abe Chernin emphasized the importance of monitoring the task force’s impact on future enforcement actions.

“We will be watching how enforcement may change in 2025, in light of the SEC’s recently announced crypto task force,” he said.

The coming years offer an opportunity to recalibrate regulatory efforts and rebuild trust between the SEC and the cryptocurrency community. Nevertheless, Gensler’s tenure will be remembered for its overreach, with the exiting chair christened one of crypto’s nemeses.