Last Fiscal Year Sees Multiple Crypto Enforcement Actions and Fines by Financial Regulators


Cryptocurrency seems to be the cause of a recent influx in enforcement actions and fines by regulators by the close of the most recent fiscal year. In reports, the Commodity Futures Trading Commission said that they had many more enforcement actions within fiscal 2018, which concluded at the end of September. This activity marks to first full fiscal year that President Donald Trump has been leading.

Along with these actions, the agency also assigned about $900 million in penalties for civil cases, which is higher than the majority of the years under the Obama administration. However, the increase seems to follow a pattern of decline from fiscal 2017, which has elicited criticism from multiple consumer groups and Democrats.

Former CFTC enforcement lawyer and special counsel for Katten Muchin Rosenman LLP Gary DeWaal spoke about this data, saying, “They’ve tried to clarify some of their emphases—we know that cryptocurrency manipulation is an issue, insider trading is an issue, and they’re very focused on spoofing.”

Experts believe that the Securities and Exchange Commission’s fiscal-year numbers will be quite different. The entities handle two different sides of the of the financial market, though there is a small overlap concerning derivatives.

Current CFTC Chairman J. Christopher Giancarlo held a speech in Minneapolis this week where he spoke about the enforcement statistics. He started with the repudiation that “you can’t get a complete picture of an enforcement program through quantitative metrics alone.” He added, “By any measure, enforcement during this last year has been among the most vigorous in the history of the CFTC.”

In the last year, CFTC has multiple cases of spoofing this year, but it exceeds the former year’s statistics by five times. They’ve also come out victorious in a recent court case that allowed regulators to categories cryptocurrencies as commodities. This means that regulators will have authority over the cryptocurrency market in the same way that they already take on other commodity markets.

There are multiple settlements that the CFTC won as well, in relation to “interest-rate benchmark manipulation,” according to the Wall Street Journal. The settlements stretched from $30 million to $90 million and involved major banking institutions, including JPMorgan Chase & Co., Deutsche Bank, and Bank of America.

Under the Obama administration, there were only about three cases a year that exceeded $10 million. However, in this year, Mr. Giancarlo commented that there are 10 cases that exceeded that amount this year alone. When comparing the numbers in 2018, he checked them against the figures accrued from 2009 to 2016, rather than during 2017, since it was a transition ear for the presidential administration.

The annual figures typically include the work done by law enforcement over a greater length of time than just the year, since the annual figures that contribute are usually not concluded until the year ends. The figures for the 2018 fiscal year should be released later this year, as a result. However, reports are already showing that SEC-issued fines dropped 7.2% in 2017, which is the lowest recorded value in five years.

When SEC enforcement co-director Stephanie Avakian spoke in a speech in September, there was no indication of how 2018 performed in relation t other years. However, she said, “any assessment that suggests our effectiveness should be measured solely based on the number of cases we bring over any particular period of time is misguided.”

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