
It was already understood that the SEC under the new Trump administration would be taking a different approach to cryptocurrency enforcement, but the announcement on January 21, 2025 that the agency under Acting Chair Mark Uyeda was forming a cryptocurrency task force “dedicated to developing a comprehensive and clear regulatory framework for crypto assets” certainly underscores the fact that the SEC will treating crypto differently than was the case during the Biden administration. But while we look ahead to what may be in store for crypto under the new administration, it is also worth looking back at what the agency’s approach to crypto enforcement has been up to this point. A new Cornerstone Research report entitled “SEC Cryptocurrency Enforcement: 2024 Update” (here) provides a comprehensive overview of the agency’s crypto enforcement so far.
The Report’s Findings
Among other important things the report does is to provide a review of the SEC’s 2024 crypto-related enforcement. The report shows that in calendar year 2024, the agency brought 33 crypto-related enforcement actions in 2024, representing a 30% decrease from the record number of 47 crypto-related enforcement actions in 2023. Interestingly, of the 33 crypto actions in 2024, more than half were brought in September and October, just before the November 5 Presidential election. Only four actions were initiated in November and December.
The 33 crypto enforcement actions the agency brought in 2024 involved 90 defendants, of these, 25 involved federal court lawsuits and eight involved administrative proceedings.
One other particularly interesting thing the report does is to compare the agency’s crypto enforcement activity under SEC Chair Jay Clayton, during the first Trump administration, with the activity under Gary Gensler, in the just-completed Biden administration.
The report shows under Clayton, the agency brought 70 crypto enforcement actions, while under Gensler, the agency brought 125 crypto enforcement actions. The report also shows that even prior to the period when Clayton was SEC chair, the agency was bringing crypto enforcement actions, although in much smaller numbers. Since the first crypto enforcement action in July 2013, the SEC has brought a total of 207 crypto enforcement actions, consisting of 135 federal court lawsuits and 72 administrative proceedings.
During 2024, the SEC obtained total monetary recoveries of $4.982 billion, by far the largest recovery amount in any single year. However, of the $4.982 billion in recoveries in 2024, $4.55 billion was recovered in a single monetary settlement, in the SEC v. Terraform Labs action. Of the $4.55 billion recovery in the Terraform Labs case, $4.05 billion consisted of disgorgement and prejudgment interest. The amount of recoveries in crypto actions by the SEC under Gensler totaled $6.05 billion, compared to $1.52 billion by the SEC under Clayton.
Discussion
It would be easy to look at the comparative enforcement data for the Clayton and Gensler eras (that is, 70 crypto enforcement actions under Clayton compared to 125 under Gensler) and to conclude that the SEC took a more aggressive enforcement approach under Gensler. However, a longer-term view may cast some doubt on this interpretation.
Consider this statistic: while there were “only” 70 crypto enforcement actions by the SEC under Clayton, there were in fact a total of only five SEC crypto enforcement actions under Clayton’s predecessor, Mary Jo White. In other words, it is possible to interpret the historical data as suggesting that the enforcement action under successive administrations simply increased as the level of crypto-related activity increased.
It remains to be seen how the crypto will be dealt with by the SEC under its presumptive chair, Paul Atkins. It is highly pertinent to note that Atkins is generally regarded as a “crypto advocate.”
One potentially complicating factor for the SEC and for Atkins is that Donald Trump, in addition to being the President of the United States, is also now a crypto mogul.
On Friday, January 17, 2025, just days before he was sworn in as President (that is, just before Trump would be entitled to assert whatever rights to Presidential Immunity that he might otherwise have), Trump announced sales of his $TRUMP crypto token. (There is also an accompanying $MELANIA token as well). The price of the tokens soared after trading began; Trump’s holdings in the token are worth billions (though he can’t trade in them for three years). He is also apparently set to make millions in fees just from trading activity.
The Editorial Board of the Wall Street Journal published a January 22, 2025, editorial (here) about Trump’s crypto venture. Among other things, the editorial states, while Trump may have succeeded in making himself a crypto billionaire, at least on paper, his crypto token launch “is inviting trouble with what looks like remarkably poor judgment.” After reviewing the details of Trump’s crypto arrangements, the editorial states:
All of this creates flashing-red political risks and ethical conflicts. Start with who may be buying the tokens. A business or foreign official with interests before the federal government might seek to curry favor with Mr. Trump by announcing plans to buy millions of his token to pump up the price. Or, worse, whispering to Mr. Trump that he’s made the purchases, since crypto holdings aren’t disclosed. If Mr. Trump’s regulators then act in a way that aids crypto or the person seeking the favor, he’ll be accused of aiding the buyer in service of presidential self-dealing.
The report also notes that Trump’s crypto launch has “created a regulatory nightmare for Paul Atkins, his highly qualified nominee to run the SEC.” Atkins, the Journal notes, was crypto friendly long before his nomination, but “now any regulatory move he takes that the industry supports will be attacked as helping Mr. Trump’s business. The Trump tokens might hurt the crypto industry by making it all look like a get-rich-quick scheme.”
The editorial concludes by saying:
No careful President would get anywhere near this kind of political risk, and we can’t recall any President who has. Where are Mr. Trump’s lawyers? In his first term, Mr. Trump was often deterred from some of his worst impulses by legal advisers who saw their job as serving the Presidency as much as this President. The crypto caper is a worrisome sign that Mr. Trump’s current advisers don’t understand the difference any better than he does, or that they are too cowed to speak up.
Ladies and Gentlemen, these comments did not appear in the New York Times or the Washington Post. These comments appeared on the editorial page of the Wall Street Journal (owned and controlled by Rupert Murdock’s News Corp.)
It is probably worth noting that Trump’s new venture into crypto not only has been criticized on the Journal’s editorial page. It has also drawn concerns from within the crypto industry itself. The New York Times reports that some in the crypto industry felt “blindsided” by the move, saying that it looks like a blatant “cash grab” that can only serve to “undercut the industry’s credibility.”