Will Binance reach a settlement with the SEC? Take a look at the well-known projects that have been fined by the SEC in history.
According to past history, after being investigated by the SEC, encryption projects are difficult to escape "paying with their lives". In this incident, what level of punishment will Binance and CZ face? BlockBeats has summarized the investigated projects and their fine amounts as follows:
Bloom Protocol - $30.9 million
Reason for prosecution: SEC accused it of conducting an "unregistered security" Token IC0.
Penalty amount: 3090 million US dollars.
On August 10, 2022, the SEC ordered the encryption startup Bloom Protocol to register its tokens or face a fine of $31 million. Currently, the US Securities and Exchange Commission has issued a cease and desist order against Bloom Protocol, accusing it of conducting unregistered cryptographic asset securities IC0. Bloom has promised to register its tokens and compensate affected investors, or face a fine of up to $30.9 million.
Kraken - $30 million
Reason for prosecution: Suspected provision of unregistered securities to American investors.
The fine amount: 30 million US dollars.
On February 9, 2023, the cryptocurrency trading platform Kraken is under investigation by the SEC to determine whether it has violated certain regulations regarding the provision of unregistered securities to US investors. The current investigation is in its later stages and it is unclear which tokens or products are under scrutiny.
On February 10th, Kraken reached a settlement with the SEC and paid a fine of $30 million. At the same time, Kraken will immediately terminate its cryptocurrency staking services for US customers.
Block.One (EOS) - $24 million
The reason for the lawsuit: accused of raising billions of dollars over the past year using unregistered initial coin offerings.
Settlement amount: 24 million US dollars.
In September 2019, SEC filed a lawsuit against Block.One, alleging that Block.One provided investors with false and misleading information about EOS, an unregistered security offered by Block.one. As part of the settlement, Block.one agreed to pay a fine of $24 million, which is a small fraction - only 0.6% - of its total funding of $4 billion.
EOS, as the largest financing in the history of the cryptocurrency industry, has had a significant impact on how subsequent crypto practitioners view regulation due to its penalty result. At the time, the community had a similar joking saying that "a penalty of 240 million for 4 billion is not punishment, it's encouragement."
After the reconciliation statement was issued, EOS rose by 10%.
Tezos - $25 million
Reason for lawsuit: Conflict between the founder and the foundation resulted in the delay of the launch of the Tezos mainnet, causing investors to not receive XTZ in a timely manner.
Penalty amount: 25 million US dollars.
In July 2017, Tezos launched an ICO and raised $232 million. However, while the foundation was making a lot of money, Tezos co-founders Arthur and Kathleen accused Tezos Foundation Chairman Johann Gevers of unauthorized issuance of $1.5 million worth of XTZ in October 2017. They also filed a lawsuit against Dynamic Ledger Solutions, demanding $25 million in settlement compensation.
The internal conflict between the founder and the foundation directly led to the delay of the Tezos mainnet launch. Law firm Block & Leviton has been investigating Tezos since October 2017 and officially filed a class action lawsuit on behalf of nearly 30,000 investors against Tezos in mid-December.
Finally, after nearly three years of back-and-forth in the Tezos class action lawsuit, the Tezos Foundation announced in March 2020 that it was seeking a settlement and would pay a $25 million fine to the SEC.
LBRY - $20 million
Reason for prosecution: LBRY violated securities laws by selling its native LBC Token without registering with the SEC.
The fine amount is: 20 million US dollars.
On November 8, 2022, the encryption company and blockchain content distribution platform LBRY was accused of selling its native LBC Token without registering with the SEC, violating securities laws. On December 1, LBRY announced its defeat and stated that it had been "strangled by US law and debt, and although the LBRY protocol and blockchain will continue to exist, LBRY Inc. must die." LBRY Inc. CEO Jeremy Kauffman stated that the specific amount of the fine from the US Securities and Exchange Commission has not yet been received, but it is estimated to be $20 million.
NVIDIA - $5.5 million
Reason for prosecution: Failure to disclose the impact of cryptocurrency mining on the company's operations.
Penalty amount: 5.5 million US dollars.
Penalty amount: 1 million US dollars.
EtherDelta - $38,800 USD
Penalty amount: 38.8 million US dollars.
The US Securities and Exchange Commission (SEC) has filed a lawsuit against Zachary Coburn, the founder of the cryptocurrency trading platform EtherDelta, accusing him of operating an unregistered digital currency exchange. Stephanie Avakian, co-director of the SEC's enforcement division, stated that EtherDelta should have been registered with the SEC or qualified for an exemption from registration.
On November 8, 2018, the SEC announced that Zachary Coburn had agreed to pay $300,000 in restitution, $13,000 in pre-judgment interest, and a $75,000 penalty to the U.S. Securities and Exchange Commission (SEC).
Telegram (TON) - $18.5 million returned out of $1.224 billion
On December 3, 2017, TON released a 132-page white paper. In order to raise funds, on January 12, 2018, TON officially announced the ICO. TON originally planned to divide the closed financing into three stages. Unexpectedly, after only the second stage, they raised $1.7 billion, twice the expected amount, so the third stage was cancelled.
On October 12, 2019, just before the TON mainnet was about to go live, the US Securities and Exchange Commission (SEC) suddenly sent a lawsuit letter. In the lawsuit letter, the SEC stated that they classified the financing process of GRAM as "illegal online digital asset securities sales" and prepared to take "emergency action and obtain temporary restraining orders" against two offshore investment companies that participated in its Token GRAM private placement, on the grounds of violating securities laws.
On the court, in order to restrict the sale of GRAM, the US court made an incomprehensible demand. The court not only required Telegram not to sell GRAM in the United States, but also globally. Helpless, Telegram had to announce the abandonment of TON.
On May 12, 2020, Pavel Durov, the founder of Telegram, announced on the Telegram public channel that the Telegram Open Network (TON) project has been terminated. Telegram will return 70% of the $1.7 billion raised to investors, which amounts to $1.224 billion. Additionally, Telegram will have to pay a civil penalty of $18.5 million to the SEC. If the company wishes to attempt another token sale, it must notify the SEC 45 days in advance.
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