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U.S. regulators have imposed $32 billion in fines on crypto companies to resolve compliance disputes. Who did they make the most money from?
Of the total, a record $19.45 billion came in 2024. This is due to the $12.7 billion payment to FTX and Alameda Research. In August, Judge Peter Castel ruled that the firms must pay, jointly and severally, $8.7 billion in restitution to those who suffered losses. In addition, the agreement calls for a $4 billion fee to be paid in return for the ill-gotten gains.
The settlement with Terraform Labs brought regulators $4.5 billion in 2024. The firm will pay about $3.59 billion in interest and a fine of $420 million. Its founder, Do Kwon, will pay $204.3 million in interest, fines, and compensation and must accrue at least the same amount to the “bankruptcy estate,” which will be distributed among investors.
Among the most significant fines were Binance’s $4.3 billion and Celsius’s $4.7 billion, which occurred in 2023. As part of the case, the largest crypto exchange was ordered to pay a fine of $1.81 billion in a criminal case and will lose $2.51 billion in compensation.
“The leading global crypto exchange agreed to plead guilty in November 2023, to resolve lawsuits with multiple U.S. regulators including the Department of Justice (DOJ), Treasury Department and the Commodity Futures Trading Commission (CFTC).”
CoinGecko report
As for the Celsius fine, in 2023, the U.S. Federal Trade Commission announced a settlement against the Celsius Network. As part of the agreement, Celsius and its subsidiaries were prohibited from offering, selling, or promoting any product or service that may be “used to deposit, exchange, invest, or withdraw any asset.”
Terra was the catalyst for the bear market, followed by the bankruptcy of Celsius, and culminated in the collapse of FTX in November 2022. Of these crypto platforms, only Binance remains operational, remaining the largest centralized exchange by trading volume.
However, the sharp increase in recovery amounts occurred in 2023, when the total amount of settlements for claims by U.S. government agencies amounted to $10.87 billion across eight cases.
When did the significant crypto enforcement actions in the U.S. occur?
The last two years have seen many crypto enforcement actions in the U.S. Of the 25 significant actions, 16 were carried out in this period, reflecting increased regulatory scrutiny following the FTX collapse in late 2022. In 2023, law enforcement agencies settled eight lawsuits for $10.87 billion, a record and an increase of 8,327.1% over the previous year.
In 2024, another eight settlements were reached for $19.45 billion. With only a few months left, the settlement value 2024 has already increased by 78.9% over the previous year.
“Given that U.S. regulators show no signs of slowing down crypto industry scrutiny, 2024 may be on track to record more lawsuit settlements than last year.”
CoinGecko report
From 2019 to 2022, American regulators also made progress in major cryptocurrency litigation. The first significant settlement came in late 2019 with Block.one, when the SEC reached a $24 million settlement over unregistered securities sales. In 2020, the SEC successfully settled two major cases: BitClave for $29.34 million in May and Telegram for $1.24 billion.
In 2021, three significant cases occurred amid rising crypto prices. Tether agreed to pay $18.5 million and then $41 million in a settlement with the CFTC. Poloniex and BitMEX also reached settlements in their lawsuits for $10.39 million and $100 million, respectively. In 2022, BlockFi reached a $100 million settlement with the SEC, and Bittrex reached a $29 million settlement with the Treasury Department.
Actual deductions may be even higher
At the same time, CoinGecko experts did not consider fines and other payments imposed by the CFTC on individual top managers.
In particular, not long ago, the founder of Binance agreed to pay a $50 million fine and voluntarily arrived for a court hearing from the UAE to the United States.
Another case concerns the charges against the BitMEX crypto exchange in 2020. Then, U.S. regulators brought charges against BitMEX and its three founders, including Arthur Hayes, the head of the exchange. Hayes left the company, pleaded guilty, paid a fine of $10 million, and was sentenced to two years of probation.
The total fines for just two individuals was a whopping $60 million. However, the regulators have a history of other personal fines, therefore the actual revenues for the regulators may be several billion dollars more.