SEC Leads US Regulators In Enforcement Actions
The report also showed that the Securities and Exchange Commission (SEC) accounted for a high percentage of the monetary penalties levied against defaulting crypto firms.
Out of the $2.5 billion, $1.69 billion came from actions brought by the SEC. Most of the SEC’s total resulted from unregistered securities offerings, while fraud was the second biggest violation.
The Commodities Futures Trading Commission (CFTC) followed the SEC with 25% of the penalties worth $624 million out of the $2.5 billion.
The Financial Crimes Enforcement Network (FinCEN) came in third place with 7% or $183 million, while the Office of Foreign Assets Control (OFAC) at 2.4% or $606,000.
SEC also carried out the first major action when it fined Bitcoin Savings and Trust to the tune of $40 million in penalties for operating a Ponzi scheme.
The largest crypto violation on record was also carried out by the SEC in 2020 when it ordered Telegram to pay up over its alleged unregistered securities offering.
Telegram settled with the SEC and returned over $1.2 billion to investors and paid an additional $18.5 million in penalties.
Although the SEC led the enforcement actions previously, Elliptic’s research shows that the CFTC has so far gone ahead of the securities regulator in 2021. The report said,
“More recently, the Commodity Futures Trading Commission (CFTC) has emerged as a major source of enforcement actions against crypto businesses, for violations relating to fraud, reporting failures and wash trading.”
According to the report, the largest fraud penalized by the CFTC was Control Finance Ltd, a Ponzi scheme run by British national Benjamin Reynolds.
Reynolds received a default judgment in New York this year compelling him to pay back his victims $439 million with a further penalty of $143 million.
Crypto-Related Scams On The Rise
Last month, Action Fraud released a report that showed that investors in the UK lost more than £63m in the past year to crypto-related investment fraud. The victims were duped via social media platforms such as Facebook and Instagram.
Between April 2020 and March 2021, more than 500 reports of investment scams linked to bogus celebrity endorsements on social media platforms were reported.
The national reporting center for fraud and cybercrime revealed that it had received thousands of reports of investment fraud that made reference to social media in a 12-month period.
Many of the victims said they were directly approached by a fraudster, while others said they were lured in via fake advertisements on their social media feeds.