REGULATION

SEC Enforcement Actions Yield Nearly $5 Billion, Whistleblower Awards Top $600 Million, Setting New Records

share
SEC Enforcement Actions Yield Nearly $5 Billion, Whistleblower Awards Top $600 Million, Setting New Records

The U.S. Securities and Exchange Commission (SEC) initiated a total of 784 enforcement actions in 2023, resulting in fines of nearly $5 billion. The whistleblower awards, totaling almost $600 million, set a new record.

SEC Enforcement Penalties Reach $49.49 Billion in 2023, Second Highest in History

According to the announcement, the SEC initiated a total of 784 enforcement actions in 2023, resulting in nearly $50 billion in penalties and approximately $10 billion distributed to affected investors. The related data is as follows:

1. Enforcement Actions

  • 784 enforcement actions, a 3% increase from 2022.

  • 501 standalone enforcement actions, an 8% increase from 2022.

CFTC's annual fines exceed $43 billion, with a doubling share of cryptocurrency enforcement

2. No Focus on Cryptocurrency Industry? SEC Enforcement Covers Various Financial Sectors

3. SEC Penalties

  • A total of $49.49 billion in penalties, marking the second-highest amount in SEC history.

  • This includes $33.69 billion in ill-gotten gains and expected interest, as well as $15.8 billion in civil penalties.

With $6.4 billion in penalties last year, SEC has allocated additional tens of millions of dollars in budget, reaching a $24 billion budget for the full year 2024

Review of SEC Enforcement in the Cryptocurrency Industry

SEC enforcement cases involve multi-billion dollar cryptocurrency fraud schemes, unregistered cryptocurrency products, platforms, intermediaries, and illegal celebrity endorsements.

  • Fraud: Such as Terraform Labs and its founder Do Kwon, cryptocurrency entrepreneurs Richard Schueler, FTX founder Samuel Bankman-Fried, and other FTX executives.
  • Unregistered Products: Genesis/Gemini, Celsius, Kraken, Nexo
  • NFTs: Impact Theory LLC and Stoner Cats 2 LLC
  • Unregistered exchanges and other intermediaries: Beaxy, Bittrex, Binance, Coinbase

The FTX incident marked a year since its glory days before November 3, 2022

SEC Whistleblower Program Sets Record High Bonuses

1. Record-Breaking Bonuses

  • Nearly $6 billion in whistleblower bonuses were awarded in 2023, setting a historical record.

  • A single whistleblower received $2.79 billion, also breaking records.

SEC whistleblowing bonuses hit a new high, with a single whistleblower receiving $2.79 billion, surpassing the total bonuses for the entire year of 2022

2. Whistleblower Reporting Numbers

  • Over 18,000 whistleblower reports were received, a 50% increase from 2022.

  • The total number of reports exceeded 40,000, a 13% increase from 2022.

SEC Chairman Gary Gensler stated:

The results of the previous fiscal year once again demonstrate the efficiency of the enforcement division, with the SEC and all its staff demonstrating excellence in tracking facts and legal matters, holding wrongdoers accountable regardless of the direction events take.

What is the SEC Whistleblower Program

According to the SEC Whistleblower Program, the bonuses paid to whistleblowers come from the investor protection fund established during the Dodd-Frank Act reform by Congress, all funded by SEC fines, with whistleblowers' identities protected anonymously by the SEC.

When enforcement actions are successful and fines exceed $1 million, whistleblower awards can range from 10% to 30% of the SEC's fines.

Under the whistleblower rules, the whistleblower must be an "individual" who provides information to the SEC about potential violations of federal securities laws; companies and other entities are not eligible as whistleblowers, and the rules do not specify whether the individual must be a U.S. citizen.