Crypto Investor Protection: SEC And CFTC Enforcement Trends

Crypto investor protection continues to evolve, with the SEC and CFTC investing resources and coordinating more closely to uphold regulatory standards. Whether you're a retail investor, an institutional trader, or part of a crypto startup, understanding enforcement trends is essential for navigating this dynamic and high-stakes regulatory environment.

Crypto Is No Longer the Wild West

The cryptocurrency industry has long been characterized as the wild west, with regulators struggling to keep pace with technological developments. As a result, crypto investor protections have lagged, particularly when compared to more traditional financial investments. Bad actors have also taken advantage of lax oversight, crypto hype, and the pseudonymous nature of crypto assets to perpetrate a variety of scams, including Ponzi schemes, pyramid schemes, pump and dump schemes, and other types of fraud.

As cryptocurrency is more widely adopted, regulators like the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) have taken a more aggressive enforcement approach. However, they continue to struggle to apply existing laws to a continually evolving landscape, with many traditional investor protections still unavailable. As a result, significant risks still remain for investors.

SEC Crypto Enforcement Trends

The Securities and Exchange Commission (SEC) currently plays a key role in overseeing the cryptocurrency industry. While the SEC has yet to establish comprehensive cryptocurrency regulations, it has been actively pursuing enforcement actions to regulate the space.

Investors should note that the SEC can generally only pursue enforcement actions if the crypto assets in question are considered "securities." While the agency adopts a broad interpretation of the term "security" to protect investors, its cryptocurrency application is still being refined by ongoing court rulings.

In cases where the SEC successfully brings an enforcement action, courts may order the wrongdoer to forfeit ill-gotten gains. These funds, known as disgorged funds, may then be distributed to investors harmed by the misconduct. In certain circumstances, courts may also impose monetary penalties aimed at both punishing the wrongdoer and deterring future violations. These penalties may be added to a "fair fund," which can be used to compensate affected investors.

Under the Trump Administration, SEC enforcement has slowed, with the agency focusing its efforts on large-scale fraud. In January, the SEC also announced the formation of a Crypto Task Force, which is dedicated to helping develop a comprehensive and clear regulatory framework for crypto assets. In shifting away from a regulation-by-enforcement approach, Chairman Paul Atkins has criticized the prior Administration for relying "primarily on enforcement actions to regulate crypto retroactively and reactively, often adopting novel and untested legal interpretations along the way."

Nonethless, the SEC has brought more than 30 crypto enforcement actions in 2025, which resulted in $2.6 billion in investor restitution and penalties, the highest on record for crypto-related cases. In May, the SEC charged New York City-based Unicoin, Inc. and three of its top executives for false and misleading statements in an offering of certificates that purportedly conveyed rights to receive crypto assets called Unicoin tokens and an offering of Unicoin, Inc.'s common stock. According to the SEC, Unicoin broadly marketed rights certificates to the public through extensive promotional efforts, including advertisements in major airports, on thousands of New York City taxis, and on television and social media. In doing so, the company made false and misleading statements that:

• Unicoin tokens underlying the rights certificates were "asset-backed" by billions of dollars of real estate and equity interests in pre-IPO companies, when Unicoin's assets were never worth more than a small fraction of that amount;
• The company had sold more than $3 billion in rights certificates, when it raised no more than $110 million; and
• The rights certificates and Unicoin tokens were "SEC-registered" or "U.S. registered" when they were not.

The case reflects the SEC's emphasis on clear-cut investment fraud, rather than debates over whether the token qualifies as a security. In doing so, the agency is sending a clear message that although it hopes to provide greater regulatory clarity for the crypto industry, it will continue to target bad actors that prey on investors.

CFTC Crypto Enforcement Trends

The CFTC regulates commodity futures, options, and derivatives markets—and increasingly asserts jurisdiction over digital assets like Bitcoin and Ethereum as commodities. Its authority centers on market integrity and combating fraud in commodity trading.

In recent years, the CFTC has prioritized actions against firms that misrepresent their trading platforms or misappropriate customer funds. Digital-asset cases accounted for almost half of the CFTC's enforcement docket in the most recent fiscal year, with related actions generating more than $17 billion in total monetary relief.

In January, the agency obtained a default judgment against Mosaic Exchange Ltd. and its CEO for a fraudulent digital asset commodities scheme. According to the CFTC, Mosaic fraudulently solicited and induced customers into transferring Bitcoin and other funds to Mosaic by claiming, among other things, that Mosaic had tens of millions of dollars in assets under management, had historically earned specific monthly profits, and the company's algorithm had specific "win" rates, and had partnership or broker agreements with certain cryptocurrency trading exchanges.

The CFTC also uses its whistleblower program to encourage tips and enforcement leads, with substantial rewards in selected cases. In 2025, the program awarded more than $42 million, with crypto tips accounting for about 28 percent of submissions.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.