In 2024, U.S. regulators have collected over $19 billion in lawsuit settlements from cryptocurrency companies, representing nearly two-thirds of all settlements to date. An October 9 report from CoinGecko highlights that bankrupt crypto exchange FTX and its affiliated trading firm, Alameda, are primarily responsible for this significant amount, having paid $12.7 billion to the Commodity Futures Trading Commission (CFTC) as part of a settlement in August.
The total settlements in 2024 encompass various types of financial recoveries, including forfeiture, disgorgement, civil penalties, and prejudgment interest. However, this figure does not account for individual lawsuits against executives within the involved companies. The eight settlements recorded this year have yielded an impressive 78% increase compared to the $10.87 billion settled in 2023. Furthermore, this year’s settlements represent a staggering 8,327% increase compared to 2022.
| Year | Settlement Amount ($ billion) | Number of Settlements |
|---|---|---|
| 2022 | 0.22 | N/A |
| 2023 | 10.87 | N/A |
| 2024 | 19.00 | 8 |
The report notes that two significant events in mid-2022— the collapse of Celsius and Terraform Labs—marked the transition from a bullish to a bearish market, culminating in the downfall of FTX. This series of events has prompted a heightened wave of regulatory scrutiny in the U.S.
Among the notable settlements for 2024, Terraform Labs’ $4.47 billion settlement with the Securities and Exchange Commission (SEC) regarding the collapse of its algorithmic stablecoin, TerraUSD (UST), ranks as the second-highest for the year. Additionally, Genesis secured the third position with its $2 billion settlement reached with the Office of the Attorney General (OAG) in August, following its Chapter 11 bankruptcy filing in January 2023.
Regulatory Activity Intensifies
Despite being only partway through the year, analyst Lim Yu Qian believes that 2024 could see additional settlements before the year’s end. “With several months left in the year, 2024 has already recorded a 78.9% increase in settlement value compared to 2023,” Qian noted.
She added that the U.S. regulators show no signs of easing their scrutiny of the cryptocurrency industry, which may result in 2024 surpassing last year’s total for lawsuit settlements.
Among the various settlements, one particularly noteworthy case is Binance’s. Qian pointed out that Binance’s settlement is significant as it represents the only billion-dollar agreement with an operating crypto company thus far, despite its monetary ranking being fourth overall. In November 2023, Binance and its former CEO, Changpeng “CZ” Zhao, agreed to plead guilty to several charges, including violations of Anti-Money Laundering (AML) requirements. This settlement involved resolving lawsuits with multiple U.S. regulators, including the Department of Justice (DOJ), Treasury Department, and CFTC.
Cumulative Impact of Regulatory Actions
Since 2019, U.S. regulators have amassed approximately $31.92 billion in settlements from cryptocurrency companies. This ongoing trend reflects the regulatory landscape’s complexity as authorities strive to create a more transparent and accountable environment in the cryptocurrency sector. The substantial financial recoveries signal regulators’ increasing determination to hold companies accountable for their actions, especially amid rising concerns about consumer protection and market integrity.
The regulatory climate for cryptocurrency companies in the U.S. appears poised for continued scrutiny. As regulatory bodies adapt to the evolving landscape of digital assets, companies may face more rigorous enforcement actions, leading to further legal challenges. The significant financial implications of these settlements underscore the necessity for crypto companies to prioritize compliance and governance to navigate the complexities of the regulatory environment effectively.
The $19 billion in settlements paid by cryptocurrency companies to U.S. regulators in 2024 highlights a pivotal moment in the industry. With a substantial increase compared to previous years and ongoing scrutiny from authorities, the implications for the future of cryptocurrency are profound. As the market continues to mature, companies must adapt to the evolving regulatory landscape to ensure sustainability and foster trust among investors and consumers alike.
Featured image credit: DALL-E by ChatGPT
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