Crypto-related enforcement actions by US states rose sharply in 2022: Report

Published at: Feb. 2, 2023

The number of crypto-related enforcement actions in the United States grew notably in 2022, according to a survey released by blockchain risk monitoring firm Solidus Labs. Both federal and state regulators broke records for enforcement actions.

There were 58 actions carried out by the four main U.S. federal agencies engaged in crypto enforcement in 2022. That number surpassed the previous high of 40 recorded in 2020 and rose 65% over the 38 actions seen in 2021.

The agencies – the Securities and Exchange Commission (SEC), the Commodity Futures Trading Commission (CFTC), the Financial Crimes Enforcement Network (FinCEN) and the Office of Foreign Assets Control (OFAC) – all broke their previous records, with the exception of FinCEN, which had one action in 2022 compared to four in other years since 2013.

The SEC led the regulators in 2022, with 30 actions, nine of which were civil suits filed after arrests were made, and some of which are ongoing. They netted $242 million in penalties. The report noted:

“The SEC announced 30 crypto-related enforcement actions in 2022, more than any other regulator we identified worldwide.”

The CFTC carried our 19 actions, up 73% from 11 in 2021. Those cases represented 21.95% of the agency’s activity, which was also a record and compares to 4.76% of crypto’s share in SEC cases.

OFAC’s eight cases is up from its previous record of five, with its sanctioning of Tornado Cash being its biggest case. The report noted that activity on Tornado Cash has fallen precipitously since OFAC’s action, in spite of industry pushback.

The report also noted that FinCEN activity is likely to pick up this year after the tightening of sanctions on Russia and strengthening of the Treasury Department’s whistleblower program. So far, all crypto-related FinCEN actions have been for 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

“States have been off to the races,” the report said. States had a combines total of 112 actions in 2022, up from 89 in 2021 and 52 in 2020. Sixteen states made their first-ever action and eight broke their records. An additional 11 states tied their previous enforcement records, and in 15 states the record was “not broken.” The report did not say explicitly whether all 50 states took actions.

Texas and Alabama regulators were the most active, with six cases each. The Texas State Securities Board, which produced the first-ever crypto-related state enforcement order in 2017, 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.”