iUnder the Biden administration, the SEC continues to be active in policing the cryptocurrency space with 19 enforcement actions related to cryptocurrency brought in the first nine months of 2021.
Executive Summary
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On April 17, 2021, Gary Gensler was sworn in as the chair of the SEC.1 Chair Gensler included crypto assets as one of the main areas to which he will direct SEC resources.2
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In the first nine months of 2021, the SEC brought 19 enforcement actions related to cryptocurrency. Twelve were litigated in U.S. district courts (“litigations”), and seven were resolved within the SEC as administrative proceedings (“administrative proceedings”).
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Cryptocurrency enforcement activity in Q1 2021 was largely in line with the activity in Q1 2020. In Q2 2021, enforcement activity slowed down as senior positions were filled under Chair Gensler.3 It bounced back in Q3 2021, with nine cryptocurrency enforcement actions
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Since the first action in July 2013, the SEC has brought a total of 94 cryptocurrency enforcement actions as of September 30, 2021:
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55 litigations
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39 administrative proceedings
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Number of Cryptocurrency Enforcement Actions by SEC Fiscal Year
While the overall number of cryptocurrency-related litigations and administrative proceedings brought by the SEC in FY 2021 slightly trailed those in FY 2020, enforcement activity picked up in the months after Chair Gensler began his tenure at the SEC and appointed his team.
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Types of Cryptocurrency Enforcement Actions
In the first nine months of 2021, the SEC brought 12 litigations and seven administrative proceedings in the cryptocurrency space.
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Allegations in Cryptocurrency Enforcement Actions
From Q1 2021 to Q3 2021, the most frequent allegations in SEC cryptocurrency enforcement actions continued to be fraud and unregistered securities offerings.
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Allegations in Cryptocurrency Litigations versus Administrative Proceedings
From Q1 2021 to Q3 2021, 11 of the 19 cryptocurrency enforcement actions alleged fraud, while 14 involved alleged an unregistered securities offering violation.
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ICOs as Unregistered Securities Offering Allegations
From Q1 2021 to Q3 2021, the SEC continued to focus on initial coin offerings (ICOs). All but one of the 14 enforcement actions alleging an unregistered securities offering violation under Sections 5(a) and 5(c) of the Securities Act were related to ICOs. More than 60% of these ICO-related enforcement actions alleged fraudulent behavior.
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[1] SEC, “Gary Gensler Sworn in as Member of the SEC,” Press Release, April 17, 2021, https://www.sec.gov/news/press-release/2021-65.
[2] SEC Chair Gary Gensler, “Testimony before the Subcommittee on Financial Services and General Government, U.S. House Appropriations Committee,” May 26, 2021, https://www.sec.gov/news/testimony/gensler-2021-05-26.
[3] See, e.g., SEC, “SEC Appoints New Jersey Attorney General Gurbir S. Grewal as Director of Enforcement,” Press Release, June 29, 2021, https://www.sec.gov/news/press-release/2021-114.
