Will Binance settle with the SEC? Take a look at the famous projects that have been fined by the SEC in history

Based on past history, crypto projects cannot escape "trading money for life" after being investigated by the SEC .

This morning, the stablecoin issuer Paxos will face a lawsuit from the U.S. Securities and Exchange Commission (SEC) due to issues related to BUSD . The SEC stated that the BUSD issued and listed by Paxos is an "unregistered security" and plans to sue Paxos for violating investor protection laws and may take enforcement actions.

According to past history, crypto projects cannot escape "paying money for their lives" after being investigated by the SEC. What kind of severe punishment will Binance and Paxos face in this incident? BlockBeats has sorted out the projects that have been investigated in the past and the amount of fines they have received as follows:

Bloom Protocol — $30.9 million

Reason for prosecution: SEC accuses it of conducting IC0 of "unregistered securities" token

Amount of fine: $30.9 million

On August 10, 2022, the SEC has ordered crypto startup Bloom Protocol to register its tokens, or face a $31 million fine. Currently, the U.S. Securities and Exchange Commission has issued a cease and desist order to Bloom Protocol, accusing it of conducting unregistered crypto asset securities IC0. Bloom promised to register the tokens and compensate the damaged investors, otherwise it will pay a fine of up to $30.9 million.

SEC Notice

Kraken – $30 million

Reason for prosecution: suspected of offering unregistered securities to U.S. investors.

Amount of fine: $30 million

On February 9, 2023, the crypto trading platform Kraken is under investigation by the SEC to determine whether it has violated certain regulations for offering unregistered securities to U.S. investors. The current investigation is in the late stages and it is unclear which tokens or products are under review.

On February 10, Kraken reached a settlement with the SEC and paid it a $30 million fine. At the same time, Kraken will immediately terminate its crypto staking services for US customers.

SEC Notice

Block.One (EOS) — $24 million

Reason for the lawsuit: Allegedly raised billions of dollars in an unregistered initial coin offering over nearly a year

Settlement Amount: $24 Million

In September 2019, the 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. In this lawsuit, the SEC's settlement condition was that Block.One had to pay a fine of $24 million. Block.one readily agreed to this, saying that the fine was a small amount for Block.One - only 0.6% of its total financing of $4 billion.

As the largest financing in the history of the cryptocurrency industry, the penalty for EOS had an important impact on the way subsequent Crypto practitioners viewed regulation. At that time, the community had a similar joking statement that "a fine of only 24 million for 4 billion is not a punishment, but encouragement."

After the settlement announcement was made, EOS rose 10%.

Tezos — $25 million

Reason for the lawsuit: The founder had a conflict with the foundation, which led to the delay of the Tezos mainnet launch and investors were unable to receive XTZ

Amount of fine: $25 million

In July 2017, Tezos launched an ICO to raise $232 million in funds. However, when the foundation was making a lot of money, Tezos co-founders Arthur and Kathleen accused Tezos Foundation Chairman Johann Gevers of issuing $1.5 million worth of XTZ without authorization in October 2017. At the same time, they filed a lawsuit against the affiliated company Dynamic Ledger Solutions, demanding the latter pay a settlement of $25 million.

The internal struggle between the founders and the foundation directly led to the delay of the launch of the Tezos mainnet. The law firm Block & Leviton began investigating Tezos in October 2017 and formally filed a class action lawsuit against Tezos on behalf of nearly 30,000 investors in mid-December.

In the end, the Tezos class action lawsuit lasted for nearly three years. The Tezos Foundation announced in March 2020 that it would seek a settlement and pay a fine of $25 million to the SEC.

LBRY – $20 million

Reason for prosecution: LBRY sold its native LBC Token without registering with the SEC, violating securities laws.

Amount of fine: $20 million

On November 8, 2022, the crypto company and blockchain content distribution platform LBRY was accused of violating securities laws by selling its native LBC Token without registering with the SEC. On December 1, LBRY announced that it had lost the case and stated that it "has been strangled by U.S. laws and debts. Although the LBRY protocol and blockchain will continue to exist, LBRY Inc. must die." Jeremy Kauffman, CEO of LBRY Inc., said that the specific amount of the fine has not yet been received from the U.S. Securities and Exchange Commission, but it is estimated to be $20 million.

Nvidia – $5.5 million

Reason for prosecution: Failure to disclose the impact of crypto mining on the company's business

Fine: $5.5 million

On May 6, 2022, the SEC disclosed a settlement charge against technology company NVIDIA Corporation (NASDAQ: NVDA) for failing to fully disclose the impact of cryptocurrency mining on the company's gaming business. It is understood that NVIDIA has declined to respond to the SEC's findings, but agreed to pay a $5.5 million fine.

Kik Interactive (Kin) — $5 million

Reason for prosecution: Sold digital asset securities to U.S. investors without registering the offer and sale in accordance with U.S. securities laws

Amount of fine: $5 million

On October 21, 2020, the U.S. Securities and Exchange Commission (SEC) announced that a federal district court had reached a final judgment in the case of Canadian communications platform Kik Interactive Inc., ruling that Kik violated federal securities laws in its $100 million ICO in 2017.

On June 4, 2019, the SEC filed a lawsuit in the U.S. District Court for the Southern District of New York, alleging that Kik sold digital asset securities to U.S. investors without registering the offer and sale in accordance with U.S. securities laws. The court approved the SEC's motion for summary judgment on September 30, 2020, ruling that Kik's "Kin" token sales were sales of investment contracts, which were securities sales, and therefore Kik violated federal securities laws when it conducted the transactions. Kik also had to pay a $5 million fine.

SEC Notice

Friedman LLP (Tether’s former auditor) – $1 million

Reason for prosecution: "serial violations of federal securities laws" and extensive "professional misconduct"

Amount of fine: $1 million

On September 27, 2022, the SEC filed a lawsuit against Friedman LLP, the former audit firm of USDT issuer Tether, for "continuous violations of federal securities laws" and a large number of "inappropriate professional practices" and reached a settlement with it. In the settlement agreement reached with the SEC, Friedman LLP has agreed to train its employees on proper audit procedures and will pay a civil penalty of $1 million and $564,138 in disgorgement and interest. Friedman LLP provided audit services to Tether from May 2017 to January 2018.

EtherDelta – $388,000

Reason for prosecution: operating an unregistered digital currency trading platform

Amount of fine: $388,000

The U.S. Securities and Exchange Commission (SEC) sued Zachary Coburn, the founder of digital currency trading platform EtherDelta, accusing him of operating an unregistered digital currency trading platform. Stephanie Avakian, co-director of the SEC's enforcement division, pointed out that the digital currency trading platform EtherDelta should be registered with the SEC or have the qualification of exemption from registration as required.

On November 8, 2018, the SEC announced that Zachary Coburn had agreed to pay $300,000 in compensation, $13,000 in pretrial interest and a $75,000 fine to the U.S. Securities and Exchange Commission (SEC).

SEC Notice

Telegram (TON) — $18.5 million, returned $1.224 billion

On December 3, 2017, TON released a 132-page white paper. In order to raise funds, TON officially announced the ICO on January 12, 2018. TON originally planned to divide the closed financing into three phases, but unexpectedly, it raised $1.7 billion in funds in the second phase, which was twice the expected amount, so the third phase was cancelled.

On October 12, 2019, just before the TON mainnet was about to go online, the U.S. Securities and Exchange Commission (SEC) suddenly sent a lawsuit letter. In the lawsuit letter, the SEC stated that they characterized the GRAM financing process as "illegal online digital asset securities sales" and were preparing to file an "emergency action and obtain a temporary restraining order" against two offshore entity investment companies that participated in its Token GRAM private placement on the grounds that they violated securities laws.

In order to restrict the sale of GRAM, the US court made an incomprehensible request. The court required Telegram not to sell GRAM in the United States, but also globally. Telegram had no choice but to announce the abandonment of TON.

On May 12, 2020, founder Pavel Durov announced in a Telegram public channel that the Telegram Open Network (TON) project was terminated. Telegram will return $1.224 billion (70%) of the $1.7 billion it raised to investors, and must also pay a civil fine of $18.5 million to the SEC. If the company wants to try to sell tokens again, it must notify the SEC 45 days in advance.