Crypto assets have become a key focus of the Securities and Exchange Commission and a number of other agencies and departments that help monitor and police the nation’s markets. Since the Commission filed its first enforcement action in 2013 the agency has initiated 127 cases tied to the assets. Cornerstone Research, SEC Cryptocurrency Enforcement (2022 Update)(“Report”) (here). During that period there have been a number of calls for new legislation. Draft legislation has been considered in Congress. None has been passed.
SEC Chairman Gary Gensler has suggested that no new legislation is on the horizon. Accordingly, he has fortified the staff of his agency to handle the task. The crypto and cyber units – both housed within the Division of Enforcement — have, for example, nearly doubled in size, adding 50 positions, according to the Report. The Division of Corporation recently posted a sample letter, summarizing recent developments in the area.
Much of the focus has been on the enforcement actions. Of the 127 actions filed by the agency, 82 were cases in federal court. The remaining 45 actions were administrative proceedings, the Report found. The agency has also filed 20 trading suspension orders and 12 delinquent filing orders.
The actions filed last year provide a good example of the work by the SEC Division of Enforcement. In 2022 a total of 30 enforcement actions were filed. The majority – 22 or 73% – were based on the sale of unregistered securities in violation of Securities Act Sections 5(a) and 5(c). Close behind are the fraud cases. There were 21 cases filed alleging fraud in 2022, alleged fraud in violation of Securities Act Section 17(a) and Exchange Act Section 10(b). In addition, four actions alleged violation of the broker-dealer registration provisions of Exchange Act Section 15(a). And, two cases alleged touting in violation of Section 17(b) by a celebrity and crypto promoter.
While other agencies contribute to the efforts of the SEC, that agency presently dominates enforcement as to crypto assets. And at present, Chair Gensler appears to be correct – no legislation appears on the horizon to takeover the regulation and policing of the assets.