U.S. Regulators Hit Crypto Firms with $32 Billion Fines in 2024

U.S. Regulators Impose $32 Billion in Fines on Crypto Companies in 2024

U.S. regulators have imposed a staggering $32 billion in fines on cryptocurrency companies to resolve compliance disputes. The bulk of these fines, a record $19.45 billion, came in 2024. This significant figure includes a $12.7 billion payment from FTX and Alameda Research. In August, Judge Peter Castel ruled that these firms must pay $8.7 billion in restitution to those who suffered losses, alongside a $4 billion fee for ill-gotten gains.

Major Settlements and Fines in 2024

The settlement with Terraform Labs contributed $4.5 billion in 2024. The firm will pay approximately $3.59 billion in interest and a $420 million fine. Its founder, Do Kwon, will pay $204.3 million in interest, fines, and compensation and must accrue at least the same amount to the “bankruptcy estate,” which will be distributed among investors.

Among the most significant fines were Binance’s $4.3 billion and Celsius’s $4.7 billion, both occurring in 2023. Binance was ordered to pay a fine of $1.81 billion in a criminal case and will lose $2.51 billion in compensation.

The leading global crypto exchange agreed to plead guilty in November 2023 to resolve lawsuits with multiple U.S. regulators including the Department of Justice, Treasury Department, and the Commodity Futures Trading Commission.

Significant Fines and Settlements in 2023

The U.S. Federal Trade Commission announced a settlement against the Celsius Network in 2023, prohibiting Celsius and its subsidiaries from offering, selling, or promoting any product or service related to depositing, exchanging, investing, or withdrawing any asset.

The Terra collapse triggered the bear market, followed by the bankruptcy of Celsius, culminating in the collapse of FTX in November 2022. Among these platforms, only Binance remains operational as the largest centralized exchange by trading volume.

Increase in Recovery Amounts

In 2023, recovery amounts soared, with U.S. government agencies settling claims totaling $10.87 billion across eight cases. A significant increase was observed in 2024, with another eight settlements reaching $19.45 billion, marking a 78.9% increase over the previous year.

Given that U.S. regulators show no signs of slowing down crypto industry scrutiny, 2024 may be on track to record more lawsuit settlements than last year.

Historical Context: Major Settlements from 2019 to 2022

From 2019 to 2022, American regulators made significant progress in cryptocurrency litigation. The first major settlement in late 2019 involved Block.one, where the SEC reached a $24 million settlement over unregistered securities sales. In 2020, the SEC settled two major cases: BitClave for $29.34 million and Telegram for $1.24 billion.

In 2021, amid rising crypto prices, three significant cases occurred. Tether agreed to pay $18.5 million and then $41 million in a settlement with the CFTC. Poloniex and BitMEX also reached settlements for $10.39 million and $100 million, respectively. In 2022, BlockFi settled with the SEC for $100 million, and Bittrex settled with the Treasury Department for $29 million.

Additional Fines and Personal Penalties

CoinGecko experts did not consider fines and other payments imposed by the CFTC on individual top managers. For instance, the founder of Binance agreed to pay a $50 million fine and voluntarily appeared in court from the UAE to the United States.

Another notable case involved charges against BitMEX and its three founders, including Arthur Hayes, in 2020. Hayes left the company, pleaded guilty, paid a $10 million fine, and was sentenced to two years of probation. The total fines for just two individuals amounted to $60 million. However, regulators have a history of other personal fines, suggesting that actual revenues for regulators may be several billion dollars more.

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