In the past year, many have claimed that the crypto industry is under attack by US regulators and recent data supports this perception. The agencies of this country broke all previous records, since 2013, in terms of legal actions against companies in the nascent space.
According to data shared by Solidus LabsThe Securities and Exchange Commission (SEC), the Commodity Futures Trading Commission (CFTC), and the Financial Crimes Enforcement Network (FinCEN) took a total of 58 enforcement actions against crypto projects.
Crypto vs US, a new normal?
As seen in the chart above, these 58 legal actions have been the highest for nearly a decade. They represent an increase of 65% from 2021 and around 60% from 2020.
The SEC has been the biggest opponent of cryptocurrencies for the past decade. In 2022, the Commission announced 30 actions against projects and companies in the sector. The agency appears to be operating under a “regulation by compliance” approach to the detriment of the infant industry.
The SEC opened and won cases against peer-to-peer digital marketplace LBRY and payment company Ripple, to name a few. The latest of these cases is still ongoing as the Commission tries to gain more jurisdiction over the digital asset industry.
The SEC is not the only US regulator after crypto projects. The CFTC has been ramping up its legal actions against the industry, registering 19 cases in 2022. This represents a 73% increase from its 2021 peak, suggesting an upward trend in legal cases filed against the infant industry.
FinCEN saw a minor increase, but its action against the Ethereum-based decentralized exchange (DEX) Tornado Cash had a significant impact. The agency added the protocol to its list of sanctioned entities that cross a line between companies/individuals and technologies. The repercussions of these sanctions continue to reverberate throughout the industry.
Which Agency Hit Crypto the Most?
The increase in regulations against cryptocurrencies stemmed from the collapse of major entities within the space. In 2022, the Terra (formerly LUNA) ecosystem collapsed, causing several companies to go bankrupt, including the hedge fund Three Arrows Capital (3AC).
Later, the collapse of crypto exchange FTX and the misappropriation of billions in customer deposits seem to have sent another message to regulators. In the US, federal and state agencies joined forces to retaliate against the infant industry.
In this context, regulators seized more than $3.5 billion in fines. According to the report, the SEC and CFTC issued most of these sanctions. The graph below shows that the SEC issued more than $2 billion in fines between 2013 and 2022.
As of this writing, Bitcoin (BTC) is trading at $23,100 with sideways movement in the last 24 hours.