Thursday, March 30, 2023
HomeNewsUS Supreme Court Limits SEC’s Penalties on Financial Crimes

US Supreme Court Limits SEC’s Penalties on Financial Crimes

The United Supreme Court has put a limitation on the Securities and Exchange Commission’s (SEC) scope to impose penalties on financial crimes, that will especially impact the cryptocurrency scams.

In a recent judgment of the case Liv vs SEC, the Supreme court ruled that the market watchdog cannot impose arbitrary disgorgements and the fine shall not exceed the profits made from the illegal activities.

The Most Diverse Audience to Date at FMLS 2020 – Where Finance Meets Innovation

The punishment must match the crime

The ruling further ordered that the imposed penalties must go for the benefits of the victims and bared the regulator from collecting it as punitive damages.

The Supreme Court also detailed that for “any civil fine, penalty, or forfeiture,” the SEC enforcement actions are subject to five years of statute limitation.

Though the ruling is applied to every financial crime case, it will have a massive impact on the crypto industry as the watchdog continues to bust more and more cryptocurrency schemes.

The case before the apex court does not even relate to the digital currency. The petitioners solicited nearly $27 million from foreign nationals to invest in the construction of a cancer-treatment center.

The SEC alleged that the petitioners misappropriated millions of dollars in funds raised from investors, in violation of the terms of the investment offering, and brought civil charges against them, seeking disgorgement equal to the full amount petitioners had raised from investors, along with some other reliefs.

The nature of cryptocurrency and the hype of the investors around the industry have encouraged many scammers to lure victims into fraudulent schemes and thus the SEC is also keeping a keen eye.

The regulator was imposing heavy fines on the perpetrators involved in crypto scams and also seeking punitive damages.

Notably, the regulator imposed $3.8 million in interest, along with several other penalties, to BitClave for defrauding crypto investors.


Most Popular