SEC Regulations and DeFi: What Every Blockchain Business Needs to Know
Last Updated: 10-22-2025
Regulatory scrutiny of the cryptocurrency ecosystem is rapidly intensifying, and decentralized finance (DeFi) platforms have found themselves squarely in the crosshairs of federal enforcement agencies. On multiple occasions, the Securities and Exchange Commission (SEC) has made it clear that it views many DeFi projects as operating under its jurisdiction, and that these projects risk lawsuits and civil penalties if they fail to comply with securities laws. While DeFi projects have argued that they are not subject to SEC oversight, the SEC has not been persuaded by their arguments, and the SEC’s enforcement efforts are now ramping up dramatically in 2025.
If you are involved in DeFi, understanding the SEC’s current approach to enforcement is essential for avoiding or efficiently defending against an investigation. DeFi is currently one of the SEC’s top priorities, and the SEC is not showing any signs of letting up. The SEC recently announced the largest corporate settlement in the history of the U.S. cryptocurrency market, and this does not appear to be the end of its efforts to police the market and protect investors.
The SEC Has the Authority to Enforce Federal Securities Laws in the DeFi Market
The first thing DeFi stakeholders need to know is that the SEC has the authority to enforce federal securities laws in the DeFi market. In this way, DeFi projects do not differ from other cryptocurrency projects—and this includes the projects that have been forced to settle with the SEC for hundreds of millions (if not billions) of dollars in recent years.
The SEC’s authority to enforce federal securities laws is not limited to traditional financial markets. In fact, the SEC has alleged that most initial coin offerings (ICOs) and other cryptocurrency token launches constitute unregistered securities offerings. Under the Howey Test, an investment vehicle constitutes a “security” if it meets the following conditions:
- There is an investment of money (or other capital);
- There is an expectation of profit from the investment;
- The investment is made in a “common enterprise”; and,
- Any profit that is earned comes from the owners’ managerial or entrepreneurial efforts.
Applying the Howey Test, the SEC has successfully argued that many token launches and sales constitute unregistered securities offerings. In doing so, the SEC has relied on the fact that purchasers of initial tokens expect the tokens to increase in value, and also on the fact that the tokens are being sold to raise capital for the businesses that are offering them.
The SEC has also sued exchanges for facilitating the trading of unregistered securities, and it has successfully argued that certain types of staking programs and other schemes are subject to its oversight as well. The SEC’s enforcement efforts have not been limited to centralized finance (CeFi) platforms, and it is now turning its focus toward DeFi.
Examples of the SEC’s Enforcement Efforts in DeFi (So Far)
While the SEC’s enforcement efforts in the DeFi space have been limited so far, they have been escalating. To date, the SEC’s efforts appear to be focused on DeFi platforms that facilitate token trading and other investments in unregistered securities. Here are some recent examples of the SEC’s enforcement actions targeting DeFi platforms:
$4 Billion Settlement
The SEC recently announced a large corporate settlement with a DeFi platform—one that the SEC has described as “the largest corporate resolution in the history of the cryptocurrency markets.” In its announcement, the SEC contended that the DeFi platform had not only facilitated unregistered securities trading, but that it had also posed “significant risks to U.S. investors and our financial system.” In addition to facilitating unregistered securities trading in DeFi, the SEC’s allegations also included violating U.S. anti-money laundering (AML) and anti-terrorism financing (ATF) laws.
$1.1 Million Settlement
The SEC also recently announced charges and a settlement with a DeFi platform that the SEC says “operated as an unregistered national securities exchange, broker, and clearing agency.” In addition to agreeing to pay a civil penalty, the DeFi platform also agreed to “permanently shut down the website and . . . destroy its keys to its smart contracts.”
$25.5 Million Settlement
The SEC also recently announced charges and a settlement with a DeFi platform for “offering and selling crypto asset securities in unregistered transactions and for failing to register the offers and sales.” The DeFi platform agreed to pay a $5.5 million civil penalty and $20 million in disgorgement as part of its settlement.
$3.4 Million Settlement
The SEC also announced charges and a settlement with a DeFi platform that was charged with failing to register the offer and sale of its tokens as securities. The DeFi platform agreed to pay a $3.4 million penalty and to destroy its tokens in settlement.
$1 Million Settlement
The SEC also announced charges and a settlement with a DeFi platform for selling unregistered digital tokens. In this case, the DeFi platform agreed to pay a $500,000 civil penalty and to destroy its digital tokens as part of the settlement, and its co-founders agreed to pay a combined total of $500,000 in disgorgement.
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Contact Spodek Law Group
If you are facing SEC scrutiny or need guidance on DeFi compliance, contact Spodek Law Group today at 212-300-5196 for a confidential consultation.
