Crypto Firms Have Paid More Than $2B in Penalties Since 2009

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  • A recent report from Elliptic reveals that the US regulators have imposed $2.5 billion in penalties against crypto-related firms.
  • As per the report, unregistered securities offerings account for the bulk of the penalties.
  • The findings indicate that “crypto is far from being the “wild west” of finance.”

A couple of weeks ago, US Senator Elizabeth Warren freshly called cryptocurrencies the “wild west” — implying that there is no regulation in the industry. This is not new, as US regulators have been labeling the crypto world the “wild west” of finance as far as one can recall.

However, as opposed to the widely-held belief, crypto assets are not unregulated, particularly not in the US. For instance, in 2013, the Financial Crime Enforcement Network announced that cryptocurrency exchanges are subject to the Bank Secrecy Act — exactly like all other financial institutions. Furthermore, crypto companies are subject to the majority of regulations and laws that are aimed at other money services businesses.

Despite all this, officials from the US often entitle cryptocurrencies, Bitcoin in particular, as the “wild west”. Nevertheless, a recent report from the major blockchain analytics firm Elliptic further disproves this theory. As per the report, crypto businesses have paid $2.5 billion in fines since Bitcoin’s inception — which reveals crypto-related businesses are not far from the reach of regulators.

US Regulatory Enforcement Has Imposed $2.5B in Penalties

Regulators in the US have imposed $2.5 billion in penalties against crypto-related companies since 2009. The penalties were triggered by various causes, but mostly due to offering unregistered securities. Other prevailing reasons include fraud, sanctions violations, and violations of AML laws.

The biggest penalty came in 2020 and was targeted towards Telegram Group Inc. for breaking federal securities laws. The SEC charged the penalty since Telegram had offered unregistered virtual tokens “Grams”. As a result, Telegram was imposed to pay a whopping $18.5 million in civil penalty, on top of the $1.2 billion it had consented to pay to initial investors.

Inclusively, the US regulators have imposed more than $1.35 billion in penalties due to unregistered securities offerings, $928 million for fraud, and $183 million for violation of AML regulations. Considering all these, we can argue that the crypto market is not unregulated and regulators can readily outreach it.

When encapsulating the report, Dr. Tom Robinson, chief scientist at Elliptic asserted:

Our analysis of crypto asset-related enforcement actions in the U.S, demonstrates that crypto is far from being the “wild west” of finance. Regulators have successfully used existing laws to halt and penalise illicit activity that has exploited crypto assets – from Ponzi schemes to money laundering operations – and to hold businesses accountable for compliance failures.