Illegal initial coin offerings (ICOs) have paid as much as a quarter of all fines and penalties levied by the U.S. Securities and Exchange Commission (SEC) in 2020, according to a report recently published by the regulator.
In its annual report for 2020, the SEC said its enforcement arm had collected some $4.68 billion in penalties over the period, up 8% from $4.3 billion in the previous year. In particular, the report highlights the failed Telegram ICO as the highest single contributor, responsible for almost the full quarter of penalties paid, with a $1.2 billion liability.
The amount collected in 2020 represents a new record high for the agency, underlining the need for ongoing regulation and enforcement of ICOs and other token transactions.
The SEC commenced enforcement proceedings against some 715 entities over the report period, covering the full range of securities offenses, including market manipulation, unregistered offerings and insider trading.
Of the funds collected so far, the regulator said it has paid out $600 million directly to the victims of those subjected to the fines.
Illegal token sales accounted for a total of $1.26 billion in fines across eight different projects over the period, including Telegram, Kik, Bitclave, Shopin, NAC Foundation, Unikrn, Boon Tech, and Bitcoiin2Gen.
The most significant contributor to the fines, the Telegram ICO raised $1.7 billion from the sale of proprietary Gram tokens to accredited investors. The project attracted the glare of the SEC, resulting in legal action against Telegram for an unregistered securities offering, which eventually led to the project’s downfall.
The report also highlights the success of the regulator’s whistleblower scheme, which offers rewards for individuals identifying breaches of regulations. Over the period, $175 million was paid in rewards across 39 individual whistleblowers, according to the report.