From the outset of his time in office, SEC Chair Gary Gensler has made it clear that establishing oversight of crypto assets represent one his priorities. In a speech last week, Gensler said that agency will be “very active” in bringing digital currency under its investor protection framework, saying further that the digital assets will not mature if they are not brought under broad regulatory oversight. The regulator’s position is not restricted to mere words; a recent report shows that the agency has indeed been active in asserting its cryptocurrency oversight through enforcement actions. According to a recent report from Cornerstone Research, the agency has bought 19 enforcement actions related to cryptocurrency in the first nine months of 2021. The report, entitled “SEC Cryptocurrency Enforcement: Q3 2021 Update,” can be found here.


The Cornerstone Research report is based on its analysis of SEC enforcement actions brought between January 1, 2013 and September 30, 2021. According to the report, the agency brought 19 cryptocurrency-related enforcement actions in the first three quarters of calendar year 2021, 12 in the form of civil actions filed in the courts, and seven through SEC administrative proceedings.


The total of 19 enforcement actions in the first three quarters of 2021 is roughly in line with the 26 cryptocurrency enforcement actions that were brought in full calendar year 2020 but slightly ahead of the 20 cryptocurrency enforcement actions brought in calendar year 2019. It is worth noting that as recently as 2017, there were only four cryptocurrency-related enforcement actions for the full calendar year (and at the time, the 2017 numbers represented a record high).


Since its first cryptocurrency enforcement action filed in July 2013, through September 30, 2021, the SEC has brought a total of 94 cryptocurrency-related enforcement actions, 55 in the form of civil actions filed in court and 39 as SEC administrative proceedings.


The report notes that while 2021 YTD figures appear to be roughly in line with 2021 full year figures, in Q2 2021 enforcement activity “slowed as senior positions were filled under Chair Gensler.” Enforcement activity “bounced back in the third quarter of 2021, with nine cryptocurrency actions.” The report notes with respect to this third quarter activity that “enforcement activity picked up in the months after Chair Gensler began his tenure at the SEC and appointed his team.”


In the first three quarters of 2021, the most frequent allegations in SEC cryptocurrency enforcement actions were “fraud and unregistered securities offerings.” Eleven of the 19 cryptocurrency enforcement actions filed in the first three quarters of 2021 involved allegations of fraud, while 11 involved allegations of an unregistered securities offering violation.


The report notes that in the first three quarters of 2021, the SEC “continued to focus on initial coin offerings (ICOs).” All but one of the fourteen enforcement actions alleging an unregistered securities offering under Section 5(a) and 5(c) of the Securities Act were related to ICOs. More than 60% of these unregistered ICO enforcement actions “alleged fraudulent behavior.”