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Crypto Companies Were Fined Almost 600% More Than TradFi Firms

Crypto companies paid $5.8bn in fines last year whilst TradFi firms were only fined $835m - the lowest in a decade

Photo by Kenny Eliason / Unsplash

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Crypto firms were fined extraordinarily more than their TradFi counterparts in 2023.

According to data from the Financial Times, crypto and digital payments companies paid $5.8bn in fines last year whilst TradFi firms only paid $835m - the lowest in a decade.

Dennis Kelleher, chief executive of Washington-based Better Markets, said the figures reflected bad practices by emerging financial sectors rather than a significant improvement in TradFi.

“The pervasive fraud and criminality in the high-profile crypto arena forced regulators and prosecutors to divert resources,” he said, adding that it is designed to “stop the egregious conduct and try to deter it from getting even worse”.

The $5.8bn includes Binance's hefty $4.3bn penalty, which it incurred as part of a potential resolution to the long-standing investigation against it.

Binance has been facing heat from US regulators, with the SEC filing 13 charges against the exchange and its founder Changpeng Zhao (CZ) in June.

Charges include mishandling customer funds, misleading investors, and having systems that apparently couldn't detect manipulative trading.

Binance’s ‘Fine’ Dining: $4 Billion Settlement News Served to VIPs First
Binance’s “VIP” clients were told about its $4.3 billion settlement two months before public knowledge over a private dinner at Singapore’s exclusive 1880 members club.

Criminality in crypto continues to be rife. A report from Chainalysis reveals the "explosive growth" of crypto "approval" phishing scams over the last two years, with at least $374 million stolen this year alone.

The report highlights how "approval" phishing has evolved from phishing in the past. "Typically, scammers trick victims into sending them cryptocurrency, usually through a phony investment opportunity or by impersonating somebody else," the report states.

Phishing Exploits Prove Web3 Folk Aren’t as Tech Savvy as They Claim
A Ledger phishing exploit causes a $504K loss whilst Web3 nerds lose $374 million to phishing scams this year

Of course, we needn't even mention the downfall of FTX, in which $8 billion was wiped out by one crypto villain and his tower of cards. LUNA and 3AC are another two firms that independently caused catastrophic damage to the industry too.

In its nascency, the crypto industry has served up some of the biggest scams and frauds the financial world has ever seen, dwarfing that of its TradFi criminal counterparts.

CZ, SBF & Do Kwon: The Tricky Case of Extraditing Crypto Villains
LUNA founder Do Kwon will be extradited to the US whilst ex-Binance CEO CZ is prohibited from flying to the UAE.

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