SEC acknowledges mistaken enforcement in crypto, 95 companies face cumulative penalties of $2.3 billion

Gate News news: The U.S. Securities and Exchange Commission (SEC) has now officially acknowledged that some of its prior enforcement actions against the crypto industry had “flaws,” and it also indicated that at least seven related cases involved a “misreading” of federal securities laws. The SEC disclosed that it had previously filed lawsuits against roughly 95 companies, with total penalties reaching as much as $2.3 billion, mainly involving issues such as violations of books and records requirements. However, these cases did not provide investors with real protection or any clear benefits.

The regulator further said that this kind of enforcement strategy reflects a bias in how resources are allocated—overemphasizing the number of cases rather than substantive investor protection. Since February 2025, the SEC has withdrawn seven crypto-related cases, including those involving major CEX-related companies and Consensys Software, sending a clear signal of an incoming policy shift.

This change is closely tied to the broader shift in the U.S. regulatory environment. After Paul Atkins took over as SEC chair in 2025, the regulator’s approach gradually moved from heavy-handed oversight toward encouraging innovation. Atkins had publicly criticized earlier policies for failing to keep pace with developments in blockchain technology and pushed for modernization of the regulatory framework. Earlier this year, the SEC, together with the CFTC, launched “Project Crypto” to attempt to clarify the regulatory boundaries for digital assets and to indicate that most crypto assets do not fall under the definition of securities.

In addition, the SEC has proposed a “safe harbor” mechanism, planning to create compliant financing space for early-stage crypto projects, lowering the bar for innovation while still protecting investors. The proposal has already been submitted into the regulatory review process; if it is approved, it could reshape the compliance pathways for the U.S. crypto industry.

From a market perspective, the shift in regulatory stance can help ease long-term uncertainty and provide a clearer environment for mainstream assets such as Bitcoin and Ethereum and for related companies. But it will still take time for policy to be implemented, and investors need to keep watching the details of subsequent legislation and enforcement. (The Block)