There were nearly twice as many state actions as federal in 2022, although both the states and the feds broke records by huge margins.
The total number of crypto-related enforcement actions in the United States increased considerably in 2022, based on a survey published by blockchain risk monitoring company Solidus Labs. Both the federal and state regulators broke enforcement action records.
There were 58 actions executed by the four main US federal agencies that were engaged in crypto enforcement in 2022. That number exceeded the past high of 40 recorded in 2021 and surged by 65% from the 38 actions that were seen in 2021.
These agencies – the Commodity Futures Trading Commission (CFTC), the Office of Foreign Assets Control (OFAC), the Securities and Exchange Commission (SEC), and the Financial Crimes Enforcement Network (FinCEN) – all broke their records, except for FinCEN that had one action in 2022 compared to four in the other years since 2013.
Notably, the SEC led the regulators in 2022 with 30 actions. Among them, nine were recorded as civil suits filed after the arrests were made, and some of them are currently ongoing. They netted up to $242 million in penalties. The official report noted:
“The SEC announced 30 crypto-related enforcement actions in 2022, more than any other regulator we identified worldwide.”
The CFTC was involved in the execution of 19 actions, up 73% from 11 in 2021. These cases represented 21.95% of the agency’s activity, which was also a record and it compares to around 4.76% of cryptocurrency’s share in SEC cases.
In that context, OFAC’s eight cases were considerably up from the previous record of five, with its sanctioning of Tornado Cash being its biggest case. This report also noted that activity on Tornado Cash has dropped swiftly since OFAC’s action, despite huge industry pushback.
This report also noted that FinCEN activity is expected to pick up in 2023 after the tightening of sanctions on Russia and the strengthening of the Treasury Department’s whistleblower program. So far, all cryptocurrency-related FinCEN actions have been for the different violations of the Bank Secrecy Act.
State's are increasing their rule makings, enforcement actions, and overall activity as it relates to #crypto in the absence of federal action.
We are starting to see a patchwork of licensing regimes form (NY, LA) with other states not far behind (NJ, CA). What does this mean?
— Cody Carbone (@CodyCarboneDC) February 2, 2023
The report highlighted:
“States have been off to the races.”
States had a cumulative 112 actions in 2022, up from 89 in 2021 and 52 in 2021. Up to 16 states made their first-ever action and eight broke their records significantly. Another 11 states tied their previous enforcement records, and in 15 states the record was ‘not broken.’ The report does not say explicitly whether all 50 states managed to take action on crypto-related cases.
Alabama and Texas regulators were the most active, each of them recording six cases. The Texas State Securities Board is the first one that produced the first-ever crypto-related state enforcement order in 2017. It is the all-time state leader with 59 actions:
“Quadruple that of the next-most active state regulators, the Colorado Division of Securities and Washington State Department of Financial Institutions.”