SEC Enforcement Explained: From Lawsuits to Rulemaking in 2026

“SEC enforcement” used to mean one thing in crypto: a lawsuit. From 2021 through most of 2024, the Securities and Exchange Commission relied on litigation as its main regulatory tool, suing exchanges, token issuers, and software developers under the theory that most digital assets were unregistered securities. That approach produced years of docket entries and a handful of enormous settlements, but almost no rule a builder could actually read in advance.

By the middle of 2026 the picture looks very different. The Commission has dropped, settled, or closed without charges nearly every major crypto case it inherited, and it is now trying, for the first time, to write formal rules for the industry instead of regulating it lawsuit by lawsuit in federal court. This piece works through what SEC enforcement actually consists of, how the agency’s approach changed under chair Paul Atkins, which cases got dropped and which did not, and what remains genuinely unresolved heading into the second half of 2026. For a closer look at how an individual case actually moves from investigation to settlement or trial, see our explainer on how SEC crypto enforcement actually works.

What SEC Enforcement Actually Means

The SEC does not write securities law; it enforces statutes Congress already passed, chiefly the Securities Act of 1933 and the Securities Exchange Act of 1934. Whether a token counts as a security at all usually comes down to the Howey test, a 1946 Supreme Court framework asking whether buyers put money into a common enterprise with an expectation of profit from someone else’s efforts. Enforcement starts with an investigation, often triggered by a tip, a whistleblower complaint, or a market blowup, and before charging anyone the staff typically sends a Wells notice: a letter stating that enforcement staff intend to recommend charges and inviting a written response.

From there a matter can be closed with no action, settled, or litigated. The remedies on the table include civil monetary penalties, disgorgement of gains plus interest, permanent injunctions, and officer-and-director bars; in fraud cases the SEC can also refer the matter to the Department of Justice for criminal prosecution. Whistleblowers who report violations can collect an award, typically 10 to 30 percent of what the agency recovers on sanctions above $1 million; in fiscal 2025 the SEC received 53,753 tips, complaints, and referrals and paid roughly $60 million to 48 whistleblowers, according to the Commission’s fiscal year results.

One structural change matters more than any single case. SEC v. Jarkesy, a 6-3 Supreme Court ruling handed down 27 June 2024, held that defendants facing civil penalties for fraud are entitled to a jury trial under the Seventh Amendment. That pushed the SEC away from deciding contested fraud cases in front of its own in-house administrative law judges and into federal court, where cases move slower, cost more, and are decided by juries rather than agency staff.

The Gensler Era: Regulation by Enforcement

Gary Gensler chaired the SEC from April 2021 until he stepped down around the change in presidential administration in January 2025. His tenure is the reference point for almost every “how much actually changed” comparison in crypto policy, because his SEC leaned on enforcement as a substitute for rulemaking. Rather than propose a rule spelling out which tokens counted as securities and which did not, the Commission sued exchanges and issuers, including Ripple in December 2020 and Coinbase in June 2023, and let settlements, and the occasional trial, define the boundary after the fact. Industry critics called this “regulation by enforcement”; the agency’s own position at the time was that existing securities law already covered the conduct at issue and needed no new rule to apply.

The scale was real. According to Cornerstone Research, the SEC brought 125 crypto-related enforcement actions and collected $6.05 billion in monetary penalties during the Gensler years, compared with 70 actions and $1.52 billion under predecessor Jay Clayton. The biggest lawsuits still working through the courts when Gensler left, against Coinbase, Kraken, Binance, and Ripple, were all filed on his watch, mostly on the theory that the platforms were operating as unregistered securities exchanges, brokers, and clearing agencies simply by listing tokens the SEC considered investment contracts.

The Leadership Reset

The shift began before Atkins was even confirmed. Commissioner Mark Uyeda became acting chair in January 2025 and moved fast: within days the Commission rescinded Staff Accounting Bulletin 121, the guidance that had forced banks to hold customers’ crypto on their own balance sheets, replacing it with SAB 122, timed to the same week as a Trump executive order on digital financial technology. A Crypto Task Force led by commissioner Hester Peirce was created on 21 January 2025 to coordinate the agency’s new direction.

Paul Atkins, an SEC commissioner in the 2000s, was sworn in as chair in April 2025 after Senate confirmation, technically to complete the remainder of Gensler’s term. His arrival coincided with a broader reshuffle. Caroline Crenshaw, the Commission’s sole Democrat, left when her term expired on 2 January 2026, leaving an all-Republican panel for the first time in the agency’s modern history. Peirce herself then announced in May 2026 that she would leave the Commission in November 2026 to teach at Regent University’s law school, meaning that by year end only Atkins and Uyeda are set to remain as sitting commissioners on what is meant to be a five-seat body. On the enforcement side specifically, Meg Ryan took over as Director of the Division of Enforcement in September 2025, and the old Crypto Assets and Cyber Unit was rebuilt as the Cyber and Emerging Technologies Unit under Laura D’Allaird, a smaller team of fraud specialists rather than the registration-focused unit it replaced.

The Numbers Behind the Pivot

The clearest way to see the change is to compare enforcement activity across the three most recent chairs, then zoom in on the transition year itself. Fiscal 2025, which the SEC defines as October 2024 through September 2025, captures the handoff mid-stream: five of the year’s 13 crypto actions were filed before Gensler actually left in January, meaning barely eight originated under the new leadership across the entire year.

Source: Cornerstone Research. Figures for the Atkins row cover fiscal 2025 only, the first full year affected by the leadership change.

Thirteen crypto actions in fiscal 2025 was a 60 percent drop from the 33 filed in fiscal 2024, and the roughly $142 million in digital-asset penalties came in at under 3 percent of the prior year’s total. Across the whole agency, not just crypto, the SEC filed 456 enforcement actions in fiscal 2025 and reported $17.9 billion in monetary relief, but $14.9 billion of that figure is a single unrelated judgment tied to Robert Allen Stanford’s decade-old Ponzi scheme; strip that out and the real total is closer to $2.7 billion, split roughly evenly between disgorgement and civil penalties. None of this means enforcement stopped. It means the agency stopped using lawsuits as its primary tool for anything short of outright fraud.

The Cases the SEC Walked Away From

At least 17 companies and individuals saw SEC crypto cases against them dropped, settled on favorable terms, or closed without charges during 2025. The highest-profile reversal was Coinbase: the Commission voted to end its case in late February 2025, and staff filed a joint dismissal on 27 February 2025. Chief Legal Officer Paul Grewal wrote that “we’ve always maintained that we were right on the facts and the law, and today’s announcement confirms that this case should never have been filed in the first place.” Grewal, who had led the exchange’s legal team through the fight, announced his own departure from Coinbase on 9 July 2026, calling the case “the single greatest achievement” of his six-year tenure; General Counsel Molly Abraham, with the company since March 2021, is taking over the legal department he built.

Not everyone at the SEC agreed with the retreat. Commissioner Crenshaw dissented from the Coinbase dismissal in a speech titled “Crypto 2.0: Regulatory Whiplash,” pointing out that a court had already found the challenged transactions fit “comfortably within the framework that courts have used to identify securities for nearly eighty years,” and arguing that dropping the case “blithely tosses aside that body of precedent.” It remains one of the sharper on-the-record disagreements between a sitting SEC chair’s office and a fellow commissioner over crypto policy.

Kraken (through its parent Payward), ConsenSys, and trading firm Cumberland DRW were all dismissed with prejudice through stipulations filed on 27 March 2025. The underlying theories varied. Kraken’s November 2023 suit alleged it ran an unregistered exchange, broker, dealer, and clearing agency all at once; a separate, earlier Kraken matter, a $30 million settlement over its staking-as-a-service program in February 2023, had already closed before the pivot and looks almost quaint next to the 2025 guidance that staking is not a securities transaction at all. ConsenSys was accused of acting as an unregistered broker through MetaMask’s Swaps and Staking features, and Cumberland DRW of running an unregistered dealer operation handling more than $2 billion in crypto assets.

Binance and its founder Changpeng Zhao had their case dismissed with prejudice on 29 May 2025, a separate matter from Zhao’s own $4.3 billion settlement with the Department of Justice and guilty plea back in November 2023. Ripple’s outcome was more mixed: the original $125,035,150 penalty over institutional token sales, entered in August 2024, was left standing, but both sides dropped their competing appeals at the Second Circuit in August 2025, closing out one of crypto’s longest-running legal fights. If you want a sense of which platforms came through this period in the strongest shape, our comparison of Coinbase, Binance, Kraken, and OKX is a useful next read.

Investigations into a longer list of companies were closed with no charges filed at all:

• Robinhood
• Uniswap Labs
• OpenSea
• Gemini
• Crypto.com
• Yuga Labs
• Immutable
• Helium
• PayPal
• Aave
• Ondo Finance

Fraud Is Still Fraud

The retreat is specific to registration theory, the idea that simply listing or issuing a token without registering it as a security is itself a violation. Cases built on actual deception have not slowed down. The starkest example predates the pivot: a jury found Terraform Labs and co-founder Do Kwon liable for fraud in under two hours of deliberation on 5 April 2024, less than two years after the May 2022 collapse of the UST stablecoin wiped out roughly $40 billion in value. The final judgment, detailed in the SEC’s own release, totaled $4.47 billion: Terraform paid $3,586,875,883 in disgorgement plus $466,952,423 in interest and a $420 million penalty, while Kwon personally paid $110 million in disgorgement, $14,320,196 in interest, and an $80 million penalty, with the disgorgement and interest owed jointly and severally between the two.

The 2026 docket keeps that pattern going. Recent actions include a case against Nathan Fuller over a fake AI trading bot that raised $12.3 million, a roughly $198 million scheme tied to Ramil Palafox and PGI Global that allegedly misappropriated more than $57 million of investor funds, and separate actions against CryptoFX and Unicoin. The message from the current Commission is consistent: an unregistered token sale with honest disclosure and no victims is now something the agency would rather handle through rulemaking, but a Ponzi scheme wrapped in crypto branding still gets sued, and fraud tips still flow into the Cyber and Emerging Technologies Unit’s roughly 30-person team just as they did before the pivot.

Project Crypto: From Speech to Rulemaking

The rulemaking push has a name: Project Crypto, unveiled in Atkins’ 31 July 2025 speech “American Leadership in the Digital Finance Revolution” and expanded in a follow-up keynote, “Inside Project Crypto,” that November. The most concrete milestone came on 17 March 2026, when Atkins used a speech at the DC Blockchain Summit to lay out a proposed token safe harbor built around three pieces: a startup exemption letting new projects raise roughly $5 million over as long as four years while publishing simplified, whitepaper-style disclosure instead of a full registration statement; a larger fundraising exemption allowing qualifying crypto investment contracts to raise up to $75 million; and a broader safe harbor for issuers that have genuinely stepped back from actively managing a token’s underlying network, the regulatory reward for a project reaching real decentralization.

Days later, the Commission followed up with a formal interpretive release stating that “most crypto assets are not themselves securities,” and that activities like mining, staking, and receiving an airdrop do not, on their own, turn a token into one. “This is what regulatory agencies are supposed to do: draw clear lines in clear terms,” Atkins said of the release. It is a notable statement from an agency that spent the previous three years arguing close to the opposite position in federal court.

Three Rulemakings Now on the Table

Speeches are not law, and interpretive releases can be withdrawn as easily as they were issued. The actual news of the summer is procedural: the SEC’s 2026 Unified Regulatory Agenda lists three crypto rulemakings targeting formal proposal, meaning a Notice of Proposed Rulemaking, this July, according to CoinDesk’s reporting on the agenda. That is the difference between a chair describing what he would like to do and an agency actually starting the notice-and-comment process that produces a rule courts and future commissions are bound by.

None of this is final. A proposal still needs clearance from the White House’s Office of Information and Regulatory Affairs, formal publication, a public comment period that typically runs 60 to 90 days, Commission deliberation over those comments, and a final vote, any step of which can reshape or delay the text that eventually takes effect. Realistically, market participants should not expect a binding final rule before 2027, even if the July proposal ships on schedule. Custody is likely to be one of the more contested details once comments start arriving, since the broker-dealer proposal would set the capital and safekeeping standards custodians have to meet; our comparison of who actually holds crypto keys in 2026 covers the landscape that rule would apply to.

Staking, Liquid Staking, and the Restaking Gray Zone

Enforcement retreat and rulemaking are not the only tools the SEC has used to redraw the boundary; staff guidance has done a lot of the same work, faster and with less fanfare. On 29 May 2025, the Division of Corporation Finance issued a statement concluding that protocol staking, whether run solo, delegated to a validator, or handled by a custodian, does not by itself involve a securities transaction. Commissioner Peirce’s companion statement carried the title “Providing Security” Is Not a “Security,” and Crenshaw dissented from that one too, consistent with her Coinbase dissent months earlier. A sequel statement on 5 August 2025 extended the same shelter to liquid staking and staking receipt tokens in the style of stETH or eETH, a meaningful extension given how much value sits in liquid staking tokens across Ethereum DeFi.

Restaking and liquid restaking tokens are conspicuously not covered by either statement. Both are staff-level guidance, not Commission rules; they carry no binding force on courts, and a future Commission could withdraw them without any notice-and-comment process at all. Projects built around restaking infrastructure are, for now, operating in roughly the same interpretive gray zone that ordinary staking occupied before May 2025.

ETPs and the End of Case-by-Case Approval

The exchange-traded product market shows the same pattern of speeches and staff action moving faster than formal rules. Spot Bitcoin ETFs were approved in January 2024 only after Grayscale won a case forcing the SEC’s hand at the DC Circuit, with Gensler framing the approvals at the time as “not an endorsement” of Bitcoin itself. Every subsequent product still had to clear its own individual rule filing under Section 19(b) of the Exchange Act, a slow, one-at-a-time process.

On 17 September 2025, the SEC adopted generic listing standards for commodity-based ETPs on NYSE Arca, Nasdaq, and Cboe BZX, meaning a new product no longer needs its own case-by-case filing as long as the underlying asset already trades on an established futures market. Peirce described the change simply as “a special generic”; Crenshaw dissented again, in a statement titled “Passing the Buck.” Two days later, the Grayscale Digital Large Cap Fund, holding Bitcoin, Ether, XRP, Solana, and Cardano, became the first multi-asset crypto ETP to launch under the new framework, on NYSE Arca.

The SEC and CFTC Stop Fighting Each Other

A decade of jurisdictional friction between the SEC and the Commodity Futures Trading Commission, over which agency actually oversees which tokens and trading venues, has also started to resolve, at least at the leadership level. Michael Selig, previously chief counsel of the SEC’s own Crypto Task Force, was confirmed as CFTC chair 53-43 in December 2025 and sworn in on 22 December. The two agencies formally joined Project Crypto as partners on 30 January 2026, and Atkins announced a formal memorandum of understanding between the commissions during a speech at the Economic Club of New York on 30 June 2026.

The practical effect is fewer disputes over whether a given token or venue belongs under securities law or commodities law, and a coordinated push behind the market-structure rulemaking described above, rather than two agencies working from separate and occasionally contradictory theories of the same asset.

Congress’s Unfinished Business

Rulemaking and staff guidance can only go so far without legislation, because the SEC cannot unilaterally decide it has no jurisdiction over an asset class Congress never defined by statute. Two bills were supposed to settle that question. The GENIUS Act, covering payment stablecoins, was signed into law on 18 July 2025, requiring 100 percent reserves held in cash or short-dated Treasuries, monthly reserve disclosure, and confirming that compliant stablecoins are neither securities nor commodities; it takes effect on the earlier of 18 months after signing or 120 days after regulators finalize implementing rules.

The companion bill, the CLARITY Act, has had a rougher path. It passed the House 294-134 in July 2025, with more than 70 Democrats crossing over, and the Senate Banking Committee advanced its own version 15-9 on 14 May 2026. Since then it has stalled at Calendar No. 423 with no floor vote scheduled, blocked by three interlocking disputes that reporting from PYMNTS and other Capitol Hill trackers has tied together:

• Section 604 of the bill, which touches law enforcement access and developer liability, and has split prosecutors from a law enforcement advocacy group whose endorsement sponsors wanted
• A stablecoin yield dispute, since letting issuers pass yield to holders would touch roughly $1.35 billion a year in USDC rewards revenue for Coinbase alone
• Ethics objections tied to a financial disclosure filed 1 July 2026 showing the president’s family earned roughly $1.4 billion from crypto ventures in 2025, more than $635 million of it from the $TRUMP memecoin and over $550 million from World Liberty Financial token sales

The Senate returned from recess on 13 July 2026 with roughly three working weeks before the August recess, which multiple Capitol Hill trackers describe as the last realistic window to pass anything crypto-related in 2026. Until CLARITY or something like it becomes law, the SEC’s rulemaking sits on comparatively shaky ground: an interpretive release or a Commission rule can be reversed by a future chair far more easily than a statute can be repealed by a future Congress.

Justin Sun: A Case Study in Enforcement Discretion

The Justin Sun matter is worth walking through on its own because it shows how much personal and political context can now shape a case’s timeline. The SEC charged Sun and three entities he controlled, Tron Foundation, BitTorrent Foundation, and Rainberry Inc., in March 2023 over fraud, wash trading, and an unregistered offering of TRX and BTT tokens. The case went quiet in early 2025, not long after Sun invested a combined $75 million into World Liberty Financial across two tranches and took on an advisory role there.

That pause drew direct scrutiny on Capitol Hill. At an 11 February 2026 House Financial Services hearing, lawmakers including Maxine Waters and Brad Sherman pressed Atkins on whether Sun’s investment amounted to pay-to-play. The case was ultimately resolved through a proposed final judgment filed on 5 March 2026: Rainberry Inc. agreed to pay a $10 million penalty and accept a permanent injunction, while claims against Sun personally, Tron Foundation, and BitTorrent Foundation were dismissed with prejudice.

The postscript has nothing to do with the SEC at all. World Liberty Financial froze roughly $240 million of Sun’s token holdings in September 2025; Sun sued the platform for fraud in April 2026, and World Liberty countersued for defamation the following month. That fight is a private commercial dispute, not a regulatory one, but it is a reminder that the relationships built during the pivot years can turn adversarial just as quickly as they turned useful.

What’s Still Unsettled

Enforcement policy in mid-2026 is best described as provisional rather than settled. The interpretive releases and staff statements that now define “most crypto assets are not securities” carry no more legal weight than the next Commission wants to give them; a future chair, of either party, could withdraw them the same way this one adopted them. The rulemakings that would lock the current approach into something closer to binding law are still proposals, not final text, and CLARITY Act passage, the legislative backstop that would matter most, remains stuck in the Senate.

For builders and investors, the practical upshot is a lower litigation overhang than at any point since 2021: fewer active lawsuits, a clearer, if informal, sense of which activities the SEC will not chase, and wider institutional access through ETPs. None of that is the same as legal certainty. An interpretive release is not a safe harbor with the force of law, and a company that structures itself around Corp Fin’s staking guidance today has no guarantee that guidance survives the next change in leadership.

Leadership itself is in flux. Atkins was originally appointed to complete Gensler’s term, which technically expired on 5 June 2026; he has been renominated for a full five-year term and continues serving as chair while that nomination moves through the Senate, which is standard practice for independent commissions but still an open thread rather than a settled one. Peirce, the commissioner most associated with the pro-crypto shift, leaves in November. Restaking, most of decentralized finance, and large parts of the tokenized-securities market still operate without a clear rule either way.

A handful of open questions will determine how much of this pivot survives past 2026:

• Whether the July rulemakings actually get published on schedule, or slip into 2027 like most SEC proposals do
• Whether the CLARITY Act clears the Senate before the August recess, or stalls again for another year
• Who replaces Peirce in November, and whether her successor keeps the Task Force’s current direction
• Whether restaking and liquid restaking tokens get their own staff statement, or stay in legal limbo
• Whether a future SEC chair treats these interpretive releases as durable policy or as something to unwind

Grewal’s exit from Coinbase this week is a fitting bookend to that uncertainty. The lawyer who spent six years fighting the SEC in court is moving on now that the fight itself, though not the underlying legal uncertainty around most of the industry, is largely over.

Frequently Asked Questions

Did the SEC drop its lawsuit against Coinbase?

Yes. The Commission voted to end the case in late February 2025, and staff filed a joint dismissal on 27 February 2025. Coinbase was one of at least 17 companies and individuals whose SEC crypto cases were dropped, settled on favorable terms, or closed without charges during 2025, though Commissioner Caroline Crenshaw dissented publicly at the time.

Is Bitcoin or Ethereum considered a security by the SEC?

Under the SEC’s March 2026 interpretive release, most crypto assets, including Bitcoin and Ethereum, are not treated as securities on their own, and activities like mining, staking, or receiving an airdrop do not automatically turn a token into one. That guidance is an agency interpretation rather than a binding rule, so a future Commission could revise or withdraw it without going through formal rulemaking.

Is staking still considered a securities transaction?

No. Staff guidance issued 29 May 2025 concluded that protocol staking, whether solo, delegated, or run through a custodian, does not by itself involve a securities transaction, and a follow-up statement on 5 August 2025 extended that position to liquid staking tokens such as stETH. Restaking and liquid restaking tokens are not covered by either statement and remain in a legal gray area.

Does the SEC still prosecute crypto fraud cases?

Yes. The pullback applies mainly to registration-theory cases, where the only allegation was an unregistered offering with no deception involved. Straightforward fraud, like the Terraform Labs and Do Kwon case that produced a $4.47 billion judgment, and a steady stream of smaller Ponzi-style schemes prosecuted through 2026, continues to draw charges and referrals to the Department of Justice.

When will the SEC’s new crypto rules take effect?

Not soon. Three rulemakings covering crypto asset offerings, broker-dealer capital and custody standards, and market structure are targeting formal proposal in July 2026, but a proposal still has to clear regulatory review, a public comment period, Commission deliberation, and a final vote before it can take effect. Realistically, market participants should not expect final, binding rules before 2027.

HOGE Wire Regulation Desk, covering global crypto policy and enforcement.