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The US Securities & Exchange Commission (SEC) announced in early December, according to The Wall Street Journal, record-breaking year for financial penalty collections in 2024.

In 2023, the SEC collected $4.9 billion in penalties. However, in 2024, that figure nearly doubled, reaching an impressive $8.2 billion. Interestingly, this increase occurred alongside a 26% decline in enforcement actions, which fell to 583 cases for the year.

Additionally, the SEC barred 124 individuals from serving as officers or directors of public companies. This measure plays a crucial role in preventing individuals responsible for severe non-compliance from continuing to hold leadership positions in other organizations. Notably, this initiative marks the second-highest number of executive bans issued by the SEC in a decade.

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1. SEC and Terraform Labs

Terraform Labs was one of the key companies under the SEC's scrutiny in 2024 and played a significant role in the record penalty collections that year.

Indeed, Terraform Labs was a startup created in 2018 by Do Kwon and Daniel Shin which provided a payment platform and a blockchain called “Terra”. The platform was primarily recognized for its stablecoin, Terra, and its associated reserve asset cryptocurrency “Luna.”

Luna’s token gained considerable attention in December 2021 when its value surged from $5 to a peak of $116 in April 2022 However, the cryptocurrency experienced a catastrophic collapse on May 9 of the same year, losing 99% of its value within just 48 hours.

This crash sent shockwaves across the cryptocurrency market, with investors pulling billions of dollars out of other cryptocurrencies over fears of a similar collapse. This widespread panic resulted in an estimated $400 billion loss in market value for other cryptocurrencies like Bitcoin.

Co-founder Do Kwon was imprisoned in Montenegro until March 2024 after being convicted of document forgery. While his passport remains confiscated, authorities are considering extradition requests from both the United States, where he faces investor fraud charges, and South Korea, where he is accused of financial fraud. Do Kwon has consistently appealed against extradition, filing a new appeal in October 2024 to prevent his removal from Montenegro.

Ultimately, on June 12, 2024, the U.S. District Court for the Southern District of New York issued a final consent judgment (“Final Judgment”) against Terraform Labs and Do Kwon. The court ordered Terraform to pay US$4,473,828,306.00 in disgorgement, prejudgment interest, and civil penalties. These payments will be “deemed satisfied” through Terraform’s ongoing bankruptcy proceedings, prioritizing compensation for harmed investors and creditors. It was further determined that the SEC will not receive any funds until all affected parties are paid during the bankruptcy process.

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2. Gary Gensler Heads the SEC

The SEC has published a brief biography of its chairman, Gary Gensler. A Baltimore, Maryland native, Gensler earned a degree in economics in 1978 and an MBA from the Wharton School, University of Pennsylvania, in 1979. He joined Goldman Sachs, where he became a partner in the Mergers and Acquisitions department, later heading the firm’s Media Group and overseeing fixed income and foreign exchange trading in Asia. Gensler also served as Co-Director of Finance, leading Goldman Sachs’ global Controllership and Treasury operations.

Gensler’s public service began when he chaired the U.S. Commodity Futures Trading Commission (CFTC) during the Obama administration, where he oversaw a significant overhaul of the $400 trillion swaps market. He was also a senior advisor to U.S. Senator Paul Sarbanes, contributing to the drafting of the landmark Sarbanes-Oxley Act (2002). Additionally, he held the roles of Under Secretary of the Treasury for Domestic Finance and Assistant Secretary of the U.S. Treasury from 1997 to 2001.

Gensler has also had an extensive academic career, serving as Professor of the Practice of Global Economics and Management at the MIT Sloan School of Management, co-director of MIT’s Fintech@CSAIL program, and senior advisor to the MIT Media Lab’s Digital Currency Initiative. From 2017 to 2019, he chaired the Maryland Consumer Financial Protection Commission.

Nominated by President Joseph R. Biden, Gensler began his tenure as SEC Chairman on February 3, 2021.

Known for his firm stance on cryptocurrency regulation, his leadership often clashed with industry players. With the new Donald Trump administration assuming office, Gensler’s departure has been met with celebration across the cryptocurrency sector.

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