Allegations in SEC Cryptocurrency Enforcement Actions | JD Supra

Allegations in SEC Cryptocurrency Enforcement Actions | JD Supra

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  • Of the 46 execution actions in 2023:
    • 26 stocks (57%) alleged fraud under Section 17(a) of the Securities Act and/or Section 10(b) and Rule 10b-5 of the Exchange Act;
    • 28 (61%) alleged a violation of the offering of unregistered securities under Sections 5(a) and 5(c) of the Securities Act;
    • 17 (37%) contained both accusations.
  • In addition, a greater number of actions were filed alleging illegal promotion of securities, market manipulation or lack of registration as a stockbroker and/or exchange.
  • In eight separate actions, the SEC charged nine celebrities under Section 17(b) of the Securities Act for allegedly promoting crypto asset securities without disclosing that they received compensation.1
  • In eight actions, the SEC alleged failure to register as a broker or dealer under Section 15 of the Exchange Act and/or as an exchange under Section 5 of the Exchange Act.2 In five of the eight actions, the SEC also alleged violations of Section 17A(b) of the Exchange Act for failing to register as a clearing agency.3
  • In connection with the offer and sale of cryptoasset securities, the SEC alleged market manipulation under Section 9(a)(2) of the Exchange Act in four actions against six companies and five individuals.4

In 2023, the most frequent allegations in cryptocurrency-related enforcement actions continued to be fraud and unregistered securities offerings.

Figure 3: Number of SEC Cryptocurrency Enforcement Actions by Type of Allegations 2013-2023

Source: SEC.gov

Note: The figure focuses on the SEC’s total of 173 cryptocurrency law enforcement actions (both litigation and administrative proceedings). An enforcement action may be associated with more than one allegation. “Other allegations” include claims that have been alleged in only a few litigation or administrative proceedings, such as violations of restricted periods, failure to register as an investment company, fraudulent transactions by investment advisors, failure to maintain internal controls, and falsification of internal documents. S control.

1Administrative Procedure Order, In the matter of Paul Anthony Pierce, February 17, 2023; Administrative Procedure Order, In the matter of Aliaune Damala Badara Akon Thiam, March 22, 2023; Administrative Procedure Order, IIn the Jake Joseph Paul Affair, March 22, 2023; Administrative Procedure Order, In the matter of Shaffer Chimere Smith, March 22, 2023; Administrative Procedure Order, On the matter of Lindsay Dee Lohan, March 22, 2023; Administrative Procedure Order, In the matter of Miles Parks McCollum, March 22, 2023; Administrative Procedure Order, In the matter of Michele Anne Mason, March 22, 2023; Complaint, SEC vs. Justin Sun et al.1:23-cv-02433 (SDNY), March 22, 2023.

2Administrative Procedure Order, In the matter of Brian Bartlett Amoah and Elbert “Al” Elliott, September 26, 2023; Complaint, SEC v. Green United LLC et al., 2:23-cv-00159 (D.Utah), March 3, 2023; Complaint, SEC v. Beaxy Digital, LTD et al.., 1:23-cv-01962 (NDIll.), March 29, 2023; Complaint, SEC v. Bittrex, Inc. et al., 2:23-cv-00580 (WDWa.), Apr 17, 2023; Complaint, SEC v. Binance Holdings Limited and others., 1:23-cv-01599 (DDC), June 5, 2023; Complaint, SEC v. Coinbase, Inc. and Coinbase Global, Inc.., 1:23-cv-04738 (SDNY), June 6, 2023; Complaint, SEC v. Digital Licensing Inc. et al.., 2:23-cv-00482 (D. Utah), July 26, 2023; Complaint, SEC v. United States. Payward Inc. (d/b/a Kraken) and Payward Ventures Inc. (d/b/a Kraken)3:23-cv-06003 (NDCal.), Nov 20, 2023.

3Complaint, SEC v. Beaxy Digital, LTD et al.., 1:23-cv-01962 (NDIll.), March 29, 2023; Complaint, SEC v. Bittrex, Inc. et al., 2:23-cv-00580 (WDWa.), Apr 17, 2023; Complaint, SEC v. Binance Holdings Limited and others., 1:23-cv-01599 (DDC), June 5, 2023; Complaint, SEC v. Coinbase, Inc. and Coinbase Global, Inc.., 1:23-cv-04738 (SDNY), June 6, 2023; Complaint, SEC v. United States. Payward Inc. (d/b/a Kraken) and Payward Ventures Inc. (d/b/a Kraken)3:23-cv-06003 (NDCal.), Nov 20, 2023.

4Complaint, SEC vs. Avraham Eisenberg, 1:23-cv-00503 (SDNY), January 20, 2023; Complaint, SEC vs. Justin Sun et al., 1:23-cv-02433 (SDNY), Mar 22, 2023; Complaint, SEC v Celsius Network Limited et al., 1:23-cv-06005 (SDNY), July 13, 2023; Complaint, SEC v. SafeMoon LLC et al.1:23-cv-08138 (EDNY), November 1, 2023.

The opinions expressed herein are solely those of the authors and do not necessarily represent the opinions of Cornerstone Research.

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