The US Supreme Court has limited the SEC’s power over cryptocurrency firms
The fines levied against crypto companies will now have to be limited
An important ruling coming from the US Supreme Court put the US Securities and Exchange Commission (SEC) in a complicated situation in front of cryptocurrency businesses. The SEC has been tough when it comes to punishing defendants with fines; however, the court has confirmed the agency will need to have some regulatory limitations on its power to act. The financial watchdog will also have to make sure that the fines are going to the victims and are not use as punitive damages.
The ruling comes from a case in the Supreme Court, Liu v. SEC, in the National Law Review. In the court summary from yesterday, the court stated that the SEC cannot impose fines – which are recognized as disgorgements – that exceed the profits from illegal activity. On top of that, these fines can only be “awarded for the benefit of victims,” and not taken as imposed punitive damages.
Even though the ruling is for just one case, the court order includes all defendants. However, for crypto and blockchain firms constantly being threatened by possible SEC charges, this is a stricter definition of “the punishment must match the crime” when it comes to financial penalties. Now, the SEC will be limited in its enforcement by a five-year statute of limitations.
The SEC has imposed some significant fines on crypto companies in the past, starting with the case against crypto firm BitClave. The case ended with a $3.9 million fine in interest and extra penalties. Also, the SEC charged a former pastor and his wife for stealing $500,000 that was obtained through a fake crypto offering backed up by a bottled water business.