U.S. Securities and Exchange Commission (SEC) release Tuesday’s report shared that a total of 760 enforcement actions were filed in fiscal 2022, up 9% from the previous year. These included 462 new or “independent” enforcement actions, ranging from “first-of-its-kind” actions to cases alleging violations of traditional securities laws. was
In addition, 129 lawsuits were against issuers that allegedly failed to make required SEC filings, and 169 “subsequent” administrative proceedings resulted in civil injunctions, criminal convictions, or other It was intended to bar individuals from certain functions in the stock market for the following reasons. order.
In 2022, the SEC will collect a record $6.439 billion in fines and exploits on behalf of investors, up from $3.852 billion the year before.
Focus on crypto
The SEC’s enforcement action remains particularly focused on the rapidly evolving crypto-securities space, noting that regulators decided earlier this year to nearly double the headcount in the crypto sector. For example, in May 2022, the SEC announced that it would add 20 new positions to its renamed Crypto Assets and Cyber Unit (formerly Cyber Unit).
In the meantime, authorities continued to investigate potential misconduct in this area and made significant progress, including prosecuting crypto lender BlockFi for failing to register offers and sales of crypto lending products to retailers. We have taken enforcement action. This was the SEC’s first action against a cryptocurrency lending platform that violated the registration requirements of the Investment Company Act of 1940.
According to a Wall Street Journal report, BlockFi is currently considering filing for bankruptcy and preparing to lay off some of its employees. This comes after BlockFi announced that it “can no longer run business as usual” following the collapse of his FTX. As centralized exchange (CEX) FTX filed for bankruptcy, cryptocurrency lenders suspended many platform activities, including withdrawals, and asked customers not to submit deposits. BlockFi had “substantial exposure” to CEX in the form of obligations owed by FTX sister company Alameda to lenders, assets on the FTX platform, and undrawn lines of credit from FTX.
In addition to BlockFi, the SEC also reported indictments against 11 individuals allegedly involved in creating and promoting Forsage, the fraudulent crypto pyramid, and the Ponzi scheme.
The SEC also filed insider trading charges against Ishan Wahi and his associates, alleging that Wahi obtained material nonpublic information in his previous role as a product manager at Coinbase. The executive then tipped his associates before they traded ahead of the announcement regarding multiple cryptocurrency securities that will be available for trading on the platform.
Among the cases listed is NVIDIA Corporation, which has been charged with improper disclosure of the impact of cryptocurrency mining on its gaming business.
Wall Street giants leading the charge
The SEC is responsible for enforcing federal securities laws designed to protect investors and promote fair and orderly markets. The agency regularly publishes enforcement results that provide information on actions taken by regulators against securities law violators.
The SEC’s enforcement results are available on its website and are also published in the SEC’s annual reports. The results provide information on the SEC’s actions, including types of violations, number of cases filed, and amounts recovered.
Through enforcement results, the authorities aim to demonstrate their commitment to protecting investors and maintaining fair and orderly markets. But the SEC’s focus wasn’t just on cryptocurrencies. In fact, the record amount of civil penalties was caused in part by fines against several large Wall Street companies.
JP Morgan Securities and 16 other firms were reportedly fined a whopping $1.2 billion for their “widespread and prolonged failures” to secure text messaging communications on personal devices.
Banking giant JP Morgan to settle lawsuits involving many prominent names in the financial services industry, including Barclays Capital, Bank of America Securities, Citigroup, Credit Suisse, Deutsche Bank, Goldman Sachs, Morgan Stanley and UBS Agreed.
The committee also filed a lawsuit against Allianz Global Investors, which is paying $1 billion to settle charges it allegedly concealed from investors the downside risks of its complex options trading strategy.
Among the actions cited by the SEC included a $1.5 million fine against BNY Mellon for misrepresenting the ESG scrutiny of several managed mutual funds. The co-founder of TradeZero America was indicted earlier this year for temporarily banning trading during the “memetic stock” frenzy of early 2021, but the public allegations were the opposite. He also settled a $200 million settlement with Boeing for misleading investors about the 737 MAX.
Whistleblower and Accountability
Fiscal 2022 was also the second-largest year for whistleblower bounties, with the SEC issuing $229 million in a total of 103 bounties and hitting a record high with more than 12,300 allegations of wrongdoing. I received some information.
SEC Chairman Gary Gensler said he continues to be impressed with the commission’s executive branch. Meanwhile, head of the enforcement department, Gerbil S. Grewal, said he tried to use “every tool in the toolkit.” Grewal further said he doesn’t expect to break records or set new ones every year because he “expects compliance.”
These results show that the SEC’s enforcement department “is working with urgency to protect investors, hold fraudsters accountable, and deter future fraud in the financial markets.” is showing.
Regulatory Uncertainty in the Crypto Landscape
The SEC report comes after the U.S. Commodity Futures Trading Commission (CFTC) announced that 22% of the 82 enforcement actions filed in fiscal 2022 were against crypto-related entities. .
The CFTC has filed a lawsuit against USDT, according to the federal regulator’s annual enforcement report in late October. stablecoin Issuer Tether and its sister company, cryptocurrency exchange Bitfinex, settled for a combined $42.5 million last October.
The CFTC also highlighted other high-profile actions, many of which have yet to be resolved, including the indictment against decentralized exchange (DEX) Digitex. DEX has been accused of operating an illegal futures market. Another lawsuit was against an anonymous member of the Ooki DAO for providing illegal off-exchange tokenized margin trading and lending services.
At the time, CFTC Chairman Rostin Behnam said: Open, transparent, fair and competitive. ”
Interestingly, many in the crypto industry see the SEC as the “bad cop” of crypto regulation and the CFTC as the “good cop”. But SEC Commissioner Hester Peirce, who has been dubbed the “Crypto Mom,” said in a recent interview that the SEC and his CFTC should “work together and get input from the public at the border.” rice field. According to her, “Having one regulator dedicated to cryptocurrencies can be problematic.” Crypto and its underlying blockchain technology could be “integrated into the backend of the financial system.” The crypto industry requires SEC jurisdiction because of
“If we act together, the SEC will be a great regulator of the spot crypto market,” she said last week. It came out when it released the protection file, and she thinks this could be the “catalyst” government agency needed to “calm down” and create clear regulations.
“That doesn’t mean just taking law enforcement action. But we also need to think about this as a society and know how we want to regulate this.”
In fact, SEC Chairman Gary Gensler has declared most cryptocurrencies to be securities, but the SEC’s position on cryptocurrencies has been heavily criticized by the crypto industry and authorities have overreacted. , some argue that cryptocurrencies should not follow the same rules as before. Securities.
The regulatory environment surrounding cryptocurrencies remains relatively unclear, creating uncertainty for companies operating in this space. Some countries take a more hands-off approach, while others are more aggressive in regulating their industry. This has resulted in a hodgepodge of different rules and regulations that are difficult to navigate.
This lack of clarity makes it difficult for financial institutions to get involved with cryptocurrencies. Regulatory risks have made many banks and other traditional players hesitant to get involved. This has restricted the growth of the industry and prevented it from reaching its full potential.
Hopefully there will be more clarity from regulators around the world as the industry matures. This will give businesses more freedom to operate, allowing the crypto space to reach its full potential.