The SEC says some past crypto cases have misinterpreted securities laws
The US Securities and Exchange Commission recently stated that several past enforcement actions against crypto firms have failed to deliver benefits for investors and poorly defined securities laws.
Summary
- The SEC says that several past crypto enforcement cases have provided little protection for investors.
- The regulator has shifted its focus to fraud and market abuse after criticism of a volume-driven enforcement approach.
In a statement outlining its 2025 enforcement results, the SEC said that since fiscal year 2022, it has pursued 95 cases involving “book and record violations,” resulting in $2.3 billion in penalties.
“Along with seven cases related to crypto company registration and six cases of ‘dealer interpretation’, these cases identified that there was no direct investor damage from the violation, did not produce profit or protection for investors,” it added.
According to the SEC, the agency’s past approach has shown “bias in the number of cases brought on investor protection issues,” as well as misallocation of resources and misinterpretation of federal securities laws.
However, the agency’s approach changed after the appointment of Paul Atkins in April 2025. The SEC has moved away from the difficult enforcement situation associated with former Chairman Gary Gensler, who had received criticism from parts of the crypto industry.
Before Donald Trump’s inauguration in 2025, the judiciary engaged in what the SEC described as an “unprecedented rush” of lawsuits, often relying on the “aggressive pursuit of new legal theories.”
“We have redirected resources to the types of misconduct that cause the most damage, particularly fraud, market manipulation, and abuse of trust, and away from approaches that prioritize volume and record-setting fines over genuine investor protection,” Atkins said.
Statistics from Cornerstone Research showed enforcement actions against public companies, including crypto-related cases, decreased by about 30% in fiscal 2025 compared to the previous year.
Although there are fewer lawsuits, the SEC reported $17.9 billion in financial aid related to the 2025 actions, including $7.2 billion in civil penalties, the rest from disgorgement and prejudgment interest.
The agency said the latest results “reinvent the definition and measure of effectiveness,” focusing on actions that prevent harm to investors rather than generating large fines.
The SEC has continued to pursue many crypto companies through 2025.
In May, the SEC sued Unicoin and four current and former executives, accusing them of raising $100 million by misleading investors about certificates tied to future tokens and equity rights. The company has denied these allegations, saying that the administrator is not using his statements properly.
Separately, the organization filed a civil complaint against Ramil Ventura Palafox in April, alleging that he orchestrated a $200 million Ponzi scheme through the Praetorian Group International.
