November 17, 2022

SEC undertakes “Significant Enforcement Actions” in the Crypto Space

SEC undertakes “Significant Enforcement Actions” in the Crypto Space

  • The SEC filed 760 total enforcement actions & recovered a record $6.4 billion in 2022 across all sectors, including cryptocurrency.
  • In its report, the agency listed actions against crypto lender BlockFi, insider trading charges against Coinbase employees, fraudulent Ponzi scheme Forsage, & NVIDIA Corporation for inadequate disclosures.
  • This year, the commission also almost doubled its “Crypto Assets and Cyber Unit” staff, a decision in line with the agency’s plan to reign in the crypto sector. 

In its Enforcement Results for the fiscal year 2022, the U.S. Securities and Exchange Commission (SEC) reported that the agency continues focusing on the rapidly evolving crypto-asset securities space.

The SEC report mentioned crypto as a separate section, also noting that the agency would be adding 20 new positions to its Cyber Unit, renamed into Crypto Assets and Cyber Unit.

The nearly doubled division continued to investigate potential misconduct in the cryptocurrency space. This led to significant enforcement actions, including charges against BlockFi Lending LLC for failing to register the offers and sales of its retail crypto lending product. 

The case against BlockFi was the first-of-its-kind action against crypto lending platforms for violating the registration requirements.

Charges were also brought against 11 individuals for their alleged roles in creating and promoting a fraudulent crypto pyramid and Ponzi scheme called Forsage.

Another case included insider trading charges against Ishan Wahi, the former product manager at Coinbase, and his associates. The report said Wahi allegedly obtained material non-public information in his former role at the crypto trading platform and  tipped his associates ahead of the announcements regarding crypto asset listings. The inside information was used by his associate to front-run users.

In the ‘financial fraud and issuer disclosure’ section, the SEC covered NVIDIA Corporation for inadequate disclosures concerning the impact of crypto mining on the company’s gaming business.

Overall, the commission filed 760 enforcement actions on behalf of the investing public, representing a 9% increase from the prior year. The SEC recovered a record $6.4 billion in penalties and disgorgement through these actions, up from $3.852 billion in the fiscal year 2021. 

These cases included 462 new or stand-alone enforcement actions, a 6.5% increase over the fiscal year 2021, that included charging traditional securities law violations. 

The regulator’s actions further had 129 proceedings for alleged delinquency in required filings with the SEC, along with 169 "follow-on" administrative proceedings to suspend individuals based on criminal convictions or other orders from certain functions in the securities markets. 

While these numbers “impressed” SEC Chairman Gary Gensler, Gurbir S. Grewal, Director of the Division of Enforcement, talked about “working with a sense of urgency to protect investors, hold wrongdoers accountable, and deter future misconduct in our financial markets.”

According to Grewal, they used every tool in their toolkit, including penalties, which he said: “have a deterrent effect.” Statistically speaking, the agency made a record $4.2 billion in penalties. 

Commenting on the new records, Grewal said he doesn’t expect them to continue to set new ones each year “because we expect behaviors to change. We expect compliance.”


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