The United States Securities Exchange Commission (SEC) is one of the largest financial regulators in the country. In fact, the SEC is actively fighting against fraudulent activity regarding digital assets and blockchain. Recently, the U.S. Supreme Court made an important decision. The country’s Supreme Court decided to limit the SEC’s power to seek punitive fines on crypto companies.
This is based on the information taken from the June 23 summary of the U.S. Supreme Court case. The Supreme Court then ruled against the SEC. Let’s have a look at the case. According to the U.S. Supreme Court, the SEC can not impose fines, known as disgorgements, that exceed the profits made from illegal activities. The case Liu v. SEC in the National Law Review will have a huge impact on the crypto industry.
It is worth noting that it is possible to impose penalties on companies only to return the assets that belong to victims.
This ruling will change the industry. As a result, the SEC won’t be able to impose a fine that exceeds the profits made from illegal activities. Interestingly, the commission is already limited in its enforcement by a five-year statute of limitations.
Securities Exchange Commission and crypto-related cases
Last month, the SEC announced the charges against the crypto startup based in California. It is worth mentioning that, according to the regulator BitClave was selling unregistered securities in its initial coin offering.
People should keep in mind that, issuers of securities, traditional or digital must comply with the registration requirements of the federal securities laws.
Bitclave agreed to pay disgorgement of $25,500,000 as well as prejudgment interest of $3,444,197 and a penalty of $400,000. Notably, the firm neither admitted nor denied the regulator’s findings.
According to the SEC’s guidelines, when an asset is expected to appreciate thanks to works conducted by others, in such cases it is possible to treat this asset as a security.
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