Unregistered security offerings are the number one cause of crypto-related fines, the report found
Be it the recent US infrastructure law or the numerous scuffle with the US Securities and Exchange Commission (SEC), one cannot be proud of the relationship between the crypto industry and lawmakers.
On the one hand, regulators continue to view crypto as a vehicle for further criminal activity, while on the other hand the crypto community has attributed its inadequacies to the targeted alignment of crypto projects by the legislature.
However, a recent report examining the 50 largest fines imposed by regulators on banks, investment firms and brokers over the past 20 years has shown that crypto exchanges face only a fraction of the fines traditional financial institutions pay.
Data analyzed by Good Jobs First’s Injury Prosecution showed that Bank of America, JPMorgan Chase, and Citigroup have been among the most fined banks in the United States since 2000.
While the SEC fined both traditional financial institutions and large crypto exchanges for securities violations, the tracker reported that enforcement actions against crypto firms accounted for less than 1% of those against banks and investment firms trading in fiat currency.
The total penalties for cryptocurrency-related violations in the United States from 2009 to early 2021 are expected to be around $ 2.5 billion, as opposed to the $ 332.9 billion in penalties traditional financial institutions received in recent years 20 years, the data stated.
It’s also important to compare the highest fines in both industries. For crypto, Telegram paid $ 1.2 billion in disgorgement and $ 18.5 million in civil fines for securities violations during its Initial Coin Offering (ICO) in 2018. For Fiat, the $ 16.6 billion Bank of America paid in connection with toxic mortgage sales during the 2008 market crash was the biggest enforcement move.
The data also showed that unregistered securities offerings and fraud accounted for more than 90% of all fines imposed on crypto firms and individuals by the SEC, the Commodity Futures Trading Commission (CFTC), and the Financial Crimes Enforcement Network (FinCEN). For traditional institutions, abuse of toxic securities and violations of investor protection are the main reasons for punishment, the report concluded.