Securities Enforcement Roundup – May 2025

In this issue of our monthly Securities Enforcement Roundup, we highlight top securities enforcement developments and cases from May 2025.

In May 2025:

• More ongoing developments in the crypto enforcement area at the US Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA).
• SEC Chair Paul Atkins and Commissioners Hester Peirce, Caroline Crenshaw, and Mark Uyeda provided insights on the SEC’s enforcement agenda during the SEC Speaks in 2025 conference in Washington, DC.
• The SEC dismissed three “dealer” lawsuits where it had previously alleged that certain firms had failed to properly register with the SEC as “dealers.”
• FINRA settled two “finfluencer” actions, reflecting ongoing regulatory scrutiny of customer acquisition through social media.

MORE CRYPTO ENFORCEMENT ACTIVITY AND DEVELOPMENTS

On May 8, 2025, the SEC filed a settlement agreement in the US District Court for the Southern District of New York with Ripple Labs Inc. and the company’s two chief executives to resolve the Commission’s 2020 civil action against them (currently on appeal in the US Court of Appeals for the Second Circuit).[1] The Commission previously alleged that Ripple and its executives raised funds through the sale of digital assets (known as XRP) in an unregistered securities offering.[2]

In July 2023, Judge Analisa Torres of the US District Court for the Southern District of New York partially ruled in favor of Ripple on summary judgment, finding that while sales of XRP tokens to institutional buyers constituted “investment contracts,” which required registration under the Securities Act of 1933, other transactions in XRP, including programmatic sales on digital asset platforms, did not constitute a security. The court entered a final judgment against Ripple on August 7, 2024, holding Ripple liable for a civil penalty in the amount of $125 million (much smaller than what the SEC originally sought to recover).[3]

The May 8 settlement agreement, however, provides that Ripple and its executives need only pay the SEC a total of $50 million.[4] SEC Commissioner Caroline A. Crenshaw issued a statement of dissent to the proposed settlement agreement, “urg[ing] the courts to take a long hard look at the Commission's attempt to claw back the meritorious claims it previously made and gut its own enforcement program from the inside out.”[5]

On May 15, 2025, Judge Torres denied the parties’ proposed settlement agreement, finding that “the parties fail[ed] to address the heavy burden they must overcome to vacate the injunction and substantially reduce the Civil Penalty.”[6] Following the court’s ruling, Ripple’s chief legal officer commented publicly that “Ripple and the SEC are fully in agreement to resolve this case and will revisit this issue with the Court, together.”[7]

The SEC also dropped two other cryptocurrency-related cases this month, including the Commission’s civil action against Binance Holdings Limited, the world’s largest crypto asset trading platform, and its founder and affiliates.[8] The SEC filed its suit against Binance in June 2023 in the US District Court for the District of Columbia, alleging (among other things) that the defendants engaged in multiple unregistered offers and sales of crypto asset securities.[9]

On May 12, Chairman Atkins gave the keynote address at the Crypto Task Force Roundtable on Tokenization.[10] Chairman Atkins discussed the increasing movement from traditional “off-chain” databases to blockchain-based “on-chain” ledger systems. He also discussed his goal to develop a clear regulatory framework for crypto assets. For a thorough discussion of Chairman Atkin's address and the roundtable, see our recent LawFlash on the event. A few days after Chair Atkins’ remarks, the SEC’s Division of Trading and Markets and FINRA’s Office of General Counsel withdrew a previously issued joint statement from 2019 regarding crypto custody.[11] The 2019 statement warned that general consumer protections and safeguards may not be effective in situations involving digital assets and addressed custody and recordkeeping issues surrounding digital asset securities.[12]

Despite the SEC’s repeated withdraws from crypto-related enforcement cases, on May 20, 2025, the SEC announced charges against Unicoin Inc. and three of its top executives, alleging a fraud scheme in which the company offered certificates that purported to convey rights to receive crypto assets. The Commission alleged that the real-world assets that Unicoin told its investors would back its token were worth “a mere fraction of what the company claimed, and the majority of the company’s sales of rights certificates were illusory.”[13]

In a rare move for the SEC, this case also charged the company’s general counsel with violations of the antifraud provisions of federal securities laws related to his statements in private placement memoranda used to offer and sell Unicoin rights certificates and common stock. Without admitting or denying the SEC’s claims, the general counsel agreed to the entry of a final judgment ordering him to pay a $37,500 civil penalty.[14] Thus, while crypto-related enforcement actions are certainly being deprioritized in favor of regulatory reform, this case demonstrates that the SEC is still more than willing to bring cases in the crypto realm where there is fraud and alleged harm to investors.

SEC SPEAKS 2025

On May 19 and 20, 2025, senior SEC officials shared insights regarding the SEC’s Division of Enforcement at the Practising Law Institute’s SEC Speaks in 2025 conference in Washington, DC. Two panels of leaders in the SEC’s Division of Enforcement reiterated that dire predictions of changes to the Division’s work were “overstated.” Panelists from the Division stated that the Division will focus on individual liability, harm to retail investors, and dangerous foreign actors. Consistent with the “back to basics” messaging, the panelists also stated that they expected the Commission to continue to pursue traditional, core enforcement priorities, including insider trading, accounting and offering frauds, and breaches of fiduciary duties by investment advisers.

While the Division will continue to pursue these traditional enforcement priorities, the deputy director for the Division’s newly created “Cyber and Emerging Technologies” unit stated that the new unit will also focus on (1) the misuse of technology to commit fraud; (2) false statements about emerging technologies, such as so-called “AI washing”; and (3) hacking or other intrusions to commit securities fraud.

Several panelists voiced the Enforcement Division’s commitment to transparency. For example, SEC Deputy Director Antonia Apps and several others specifically mentioned the Wells process, which in years past has become markedly more opaque. Deputy Director Apps committed to allowing meetings with Division leadership to any respondent requesting one after the Division staff’s investigation has concluded. This opportunity to discuss with Division leadership both the staff’s and the respondent’s theories and evidence in advance of a potentially litigated action will be a welcome change to many.

Each of the current Commissioners of the SEC also delivered speeches at the conference, although they provided limited insight into their views on enforcement in areas outside the crypto space. Notably, Commissioner Peirce provided the biggest potential change to the SEC’s enforcement program by stating that it might be time for “rethinking” the “gag rule.” The so-called “gag rule” prohibits respondents from denying the allegations against them in the Commission’s complaint. This policy is designed to prevent defendants from stating publicly that they did not violate the securities laws and only settled the matter for practical reasons, such as avoiding costly litigation with the SEC. If the SEC were to eliminate the “gag rule,” it would be a sea change to the enforcement program.[15] For his part, Commissioner Uyeda also spoke to, among other things, his reasoning for backing the Commission’s vote to end its defense of the climate-related disclosure rule. He stated that, as the issue of rescinding or adapting the rule is currently fully briefed before the Eighth Circuit Court of Appeals, the court should be the final arbiter on this issue.

SEC DROPS THREE ‘DEALER’ SUITS

On May 22, 2025, the SEC filed stipulated dismissals in actions against four firms and a handful of individuals for the failure to register as “dealers” under the Exchange Act when they provided loans to penny stock companies in exchange for shares at a discount of the market price.[16] In a dissent, Commissioner Crenshaw stated that these dismissals “ignore the laws enacted by Congress—namely fundamental registration requirements of the federal securities laws—as well as long lines of judicial precedent.”[17] Commissioner Crenshaw expressed her view that “there are no other new or convincing reasons for the dismissals,”[18] adding that “[i]t is astonishing that an agency tasked with enforcing the law has decided the law does not matter.”[19]

FINRA ‘FINFLUENCER’ SETTLEMENTS

FINRA recently settled two “finfluencer” actions. On May 8, 2025, a broker-dealer agreed to pay a $1.6 million fine to settle charges in an action “originating from several FINRA examinations,” alleging that the firm failed to reasonably supervise and retain social media communications posted by influencers that promoted the firm. FINRA alleged that the firm retained more than 400 social media influencers to promote it and acquire new customers, and that many of the influencers’ posts included statements that promised specific results, were exaggerated, and/or did not include required disclosures.

Similarly, on May 27, 2025, FINRA settled another enforcement action against a firm stemming directly from an exam of the firm’s practices relating to customer acquisition through social media. There, the firm allegedly hired more than 100 social media influencers to promote the firm without reviewing and maintaining all of the communications disseminated by the influencers or establishing and maintaining a reasonably designed supervision system with respect to those communications. That firm agreed to pay a $350,000 fine.