Each month, we publish a roundup of the most important SEC enforcement developments for busy in-house lawyers and compliance professionals. This month, we examine:
- Statements from the SEC’s Division of Enforcement (“SEC Enforcement”) signaling changes to penalties and increased communication;
- The SEC’s retreat from multiple enforcement actions, including in the cryptocurrency and broker-dealer space;
- The SEC’s allegation that an offering promising the purchaser the right to receive digital tokens violated the registration provisions and other federal securities laws;
- Charges against a real estate development firm for misappropriating proceeds raised to develop a high-end real estate project; and
- Misappropriation charges against investment advisers and their principal.
1. SEC Signals Lower Penalties and More Open Communication
On May 14, 2025, Deputy Enforcement Director Antonia Apps told those gathered at an anti‑money laundering conference in Washington, D.C. to expect a more measured approach from SEC Enforcement. That may include, she explained, lower penalties and less frequent insistence on outside compliance consultants (“ICC”), which the agency had previously required in settlements, including in the off-channel communication settlements. According to Deputy Director Apps, where a firm has fully remediated any compliance issues and the SEC sees no need for an ICC, SEC Enforcement could be readily persuaded that one should not be imposed. She also indicated that self‑reporting, cooperation, and remediation are encouraged and will be rewarded.
Apps also said that SEC Enforcement would return to a prior policy of generally granting requests for Wells meetings and would ensure that defense counsel has full and fair access to information necessary to advocate for their clients. Apps additionally committed to avoiding regulatory duplication by communicating with other agencies like FinCEN and FINRA when investigating potential AML violations that may fall under the purview of multiple regulators and establishing a clear regulatory framework for digital assets through the Crypto Task Force.
2. SEC Continues to Dismiss Enforcement Actions
Continuing a Trump Administration trend, the SEC pulled back actions against cryptocurrency and blockchain companies this month. On May 8, 2025, the SEC filed a settlement agreement to resolve a civil enforcement action against Ripple Labs, Inc. (“Ripple Labs”) and two of its executives.
The SEC’s complaint had alleged that defendants, among other securities law violations, raised over $1.3 billion in the unregistered offer and sale of digital asset securities. In August 2024, Judge Torres of the United States District Court for the Southern District of New York entered a final judgment against Ripple, finding that the Company had violated the registration provisions of the Securities Act of 1933 and imposing a $125 million civil penalty. Both the SEC and Ripple appealed the final judgment.
In the May 8, 2025 settlement agreement, the parties agreed that Ripple would pay $50 million in satisfaction of the final judgment and each would withdraw their appeals. On May 15, 2025, Judge Torres issued an order denying the parties’ request to reduce the settlement amount. The judge found that the parties incorrectly styled their motion as a ‘motion for settlement approval,’ as opposed to a ‘motion for relief from a final judgment’ under FRCP 60. Applying the standard under that rule, Judge Torres refused to sign off on the order, stating that the parties had not identified any “exceptional circumstances” that warrant vacating a “significant portion” of her judgment.
Similarly, on May 29, 2025, the SEC dismissed an ongoing federal court enforcement action against Binance Holdings Ltd., BAM Trading Services, Inc., BAM Management US Holdings, Inc. (collectively “Binance”), and their founder Changpeng Zhao. In 2023, the SEC charged the defendants with a number of securities law violations, including that BAM Management and BAM Trading made allegedly material misrepresentations about surveillance and controls over manipulative trading. SEC Commissioner Caroline Crenshaw, the lone Democrat, issued a statement the day after the dismissal, noting her view that “abandonment” of the Binance action does not erase underlying court decisions applying the Howey test to digital asset offerings.
Outside the crypto space, the SEC dropped charges in four cases for unregistered dealer activity in violation of Section 15(a) of the Exchange Act earlier this month. The agency provided little reasoning behind its decision, merely stating that its decision to dismiss the suit “rests on its judgment that the dismissals are appropriate as a policy matter.” As Commissioner Crenshaw discussed in a separate statement, these dismissals may be notable in signaling a possible narrowing of the SEC’s interpretation of what a “dealer” is for purposes of the Exchange Act.
3. SEC Continues to Refine its Approach to Crypto-Enforcement
Despite the SEC’s pullback from crypto enforcement, on May 20, 2025, the SEC charged Unicoin, Inc. and four of its executives, including its General Counsel, with making false and misleading statements in an unregistered offering of a security. According to the SEC, Unicoin offered and sold over $100 million purchase certificates that purportedly conveyed the rights to future cryptocurrency assets called “Unicoins” in violation of the registration provisions of the Securities Act. Further, the SEC alleged that defendants falsely claimed that the certificates were backed by billions of dollars of real estate and equity interests in pre-IPO companies, that the company had sold over $3 billion in rights certificates, and that the rights certificates and Unicoin tokens were “SEC-registered” or “U.S. registered.” The SEC charged the defendants other than the General Counsel with violations under Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder; Unicoin and its CEO with conducting an unregistered offering of securities; and the CEO for control person liability in connection with Unicoin’s alleged violations.
In a rare action against an in-house attorney, the SEC settled its case against Unicoin’s General Counsel for negligent misstatements, imposing a $37,500 civil penalty. The SEC alleged he had been “primarily responsible” for drafting private placement memoranda and that he knew or should have known that information in the memoranda contradicted the periodic reports previously filed by the company with the SEC.
4. SEC Targets Real Estate Developers
On May 7, 2025, the SEC charged Joshua Schuster and his real estate development firm, Schuster Enterprises LLC (d/b/a Silverback), with defrauding investors for misappropriating proceeds to develop a high-end real estate project. The SEC alleged that Schuster and Silverback offered and sold $6 million of membership interests and represented to investors that the funds would be used solely to develop a Manhattan real estate project. Instead, the SEC claimed, defendants used $2 million to cover costs unrelated to the project, including general corporate and payroll expenses, payments to Schuster, and payments for other real estate projects. The SEC brought charges under Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder.
In another case focused on alleged real estate-related fraud, Judge Singhal of the United States Southern District of Florida denied defendants Joao Pedro Fonseca and Paulo Fernando de Bastos’s attempt to dismiss charges against them for the offer and sale of unregistered securities. In its complaint, the SEC alleged that defendants, and their companies RBF Trust LLC and D3 Gestion Immobiliere LLC, raised over $40 million from the sale to investors of properties which defendants did not own. The SEC alleged that defendants also misrepresented to investors that they would renovate and manage these properties as rental properties. According to the SEC, these contracts are investment contracts and qualify as “securities” for purposes of the Securities Act and Exchange Act.
5. SEC Charges Investment Adviser Principal with Fraud
On May 28, 2025, the SEC charged investment advisers Kronus Financial Corporation (“Kronus”), Finser International Corporation (“Finser”), and their principal Andrew H. Jacobus with misappropriating over $17 million from advisory clients between May 2015 and April 2024. The SEC alleged that Jacobus raised over $39 million through the offer and sale of limited partnership interests in the “Corfiser SIMI Fund,” but diverted these funds for personal use. The complaint further claimed that Jacobus misled his clients about the legitimacy, nature, and balance of their investments and about their access to the funds. The SEC also alleged that Jacobus, Finser, and Kronus collectively misappropriated at least $17.3 million from clients during this period and made $7.8 million in Ponzi-like payments to certain investors and clients.
The SEC brought charges under Section 17(a) of the Securities Act, Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, and Sections 206(1) and 206(2) of the Investment Advisors Act.
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