Crypto Firms Reportedly Racked Up $32 Billion in US Regulatory Settlements

Crypto-focused firms have reportedly racked up as much as $32 billion in US regulator settlements, according to an update from CoinGecko.

The research report from CoinGecko noted that the top crypto enforcement action carried out by US regulators has been primarily against bankrupt crypto exchange FTX as well as affiliated trading firm Alameda, which were jointly dealt the “biggest settlement” charges of $12.70 billion to date.

The research study from CoinGecko also mentioned that FTX and Alameda’s lawsuit was led by the Commodity and Futures Trading Commission (CFTC), with the settlement announced in August of this year, which is only  under two years since FTX collapsed in spectacular fashion.

CoinGecko pointed out that although this particualr judgment does not include CFTC’s lawsuit against individual company executives, the $12.70 billion settlement will go towards “repaying the $11.20 billion that FTX is estimated to owe customers and creditors.”

The CoinGecko report added that US regulators’ next largest crypto enforcement actions by overall “monetary value” are the settlements against bankrupt crypto lender Celsius ($4.70 billion), former industry participant Terraform Labs ($4.50 billion) as well as cryptocurrency exchange Binance ($4.30 billion).

Notably, CoinGecko pointed out that the collapses of Celsius and Terraform Labs in mid-2022 were considered to be “key events” that marked the shift from crypto bull run to bear market, and thus “culminating” in FTX’s fall which prompted a “new wave of regulatory scrutiny” in the United States.

As stated in the update from CoinGecko, Binance’s settlement is said to be a landmark win for US regulators by being the “only” billion-dollar settlement given to an “operating crypto company” so far, despite ranking only fourth in monetary value.

The report from CoinGecko added that the global crypto exchange agreed to plead guilty in November 2023, to “resolve” lawsuits with multiple US regulators including the Department of Justice (DOJ), Treasury Department and the Commodity Futures Trading Commission (CFTC).

There are now 25 crypto enforcement actions from US regulators that have resulted in “settlements of over $10.00 million.”

In total, CoinGecko revealed in its report that US regulators have cumulatively reached $31.92 billion in their “top settlements” against crypto companies.

CoinGecko also noted that of the top 25 crypto enforcement actions in the US, 16 settlements were reached in the last two years, reflecting “heightened regulatory scrutiny” after the FTX collapse in late 2022.

Specifically, US regulators settled 8 “top lawsuits” in 2023 with a combined value of $10.87 billion, which was a “record high” and represented an 8,327.1% spike in settlement value when compared to the year prior.

Subsequently, US regulators have secured “another 8 settlements” in 2024 to date, worth $19.45 billion or “almost two thirds of total top settlement value.”

Even with a few months left in the year, 2024 has already “recorded a 78.9% increase in settlement value compared to 2023.”

Given that US regulators show no signs of slowing down crypto industry scrutiny, 2024 may potentially be on track to record more lawsuit settlements than last year.

In late 2019, US regulators achieved their “first major crypto lawsuit settlement” with Block.one (now rebranded as B1), the company behind EOS.

The researchers at CoinGecko added in their comprehensive crypto and blockchain industry report that the Securities and Exchange Commission (SEC) reached a settlement with Block.one for $24.00 million, over charges that the company sold unregistered securities.

The report from CoinGecko also stated that the SEC went on to win two more major crypto lawsuits in 2020, with ICO issuer BitClave’s $29.34 million settlement in May, and Telegram’s $1.24 billion settlement over its Gram token offering under subsidiary TON Issuer. The $1.24 billion Telegram settlement included a disgorgement of $1.22 billion and a civil penalty of $18.50 million.

Amid the 2021 bull market, US regulators managed to record “three top crypto enforcement actions” against notable industry players.

CoinGecko added that stablecoin issuer Tether reached a settlement of $18.50 million with the New York Attorney General (NY AG) back in February, followed by a $41.00 million settlement with the CFTC in October, over claims that USDT was “fully backed by USD assets.”

The CFTC also settled against Tether’s parent company Bitfinex, at “a lower $1.50 million penalty for illegal transactions.”

Meanwhile, CoinGecko pointed out that virtual currency exchanges Poloniex and BitMEX settled their lawsuits in August for $10.39 million and $100.00 million respectively.

In 2022, the CoinGecko report noted that crypto lender BlockFi reached a $100.00 million settlement with the SEC and North American Securities Administrators Association (NASAA), while crypto exchange Bittrex reached a $29.00 million settlement with the Treasury Department.

Methodology

The research study shared by CoinGecko has examined crypto firms’ “monetary value” settlements with US regulators in federal and state court cases that have now “reached resolution,” based on official announcements from January 1, 2019 to October 9, 2024.

The settlement year was attributed according to the “date on the respective press releases.”

CoinGecko clarified that charges brought against “individuals” were excluded.



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