Why doesn’t the SEC arrest and criminally charge bad actors in crypto?

Simple: They can’t, even if they want to.

The SEC only has the power to impose civil penalties on people who break their rules. They do not have the power to impose criminal penalties.

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During an SEC investigation if they discover that criminal laws have been broken they can get the appropriate government entities involved, like the Department of Justice, for a criminal investigation.

You will frequently see a paragraph like this at the bottom of an SEC complaint

The SEC’s complaint, filed in federal district court in Seattle, Washington, charges Ishan Wahi, Nikhil Wahi, and Ramani with violating the antifraud provisions of the securities laws and seeks permanent injunctive relief, disgorgement with prejudgment interest, and civil penalties. In a parallel action, the U.S. Attorney’s Office for the Southern District of New York today announced criminal charges against all three individuals.

This just shows that they coordinate with an appropriate entity that can bring charges. It is important to note that the other entity has to choose to bring criminal charges and the SEC can't do it themselves.

Here is a sampling of individuals the SEC has filed a civil suit against

• Justin Sun, of Tron Foundation Limited, BitTorrent
• Nishad Singh, the former Co-Lead Engineer of FTX
• Caroline Ellison, of FTX
• Zixiao (Gary) Wang, of FTX
• Samuel Bankman-Fried, of FTX
• Do Hyeong Kwon, Terraform Labs
• Changpeng Zhao, Binance
• Richard J. Schueler a/k/a Richard Heart, Hex, PulseChain, and PulseX
• John McAfee
• Steven Seagal
• Floyd Mayweather, Jr
• Khaled Khaled ("DJ Khaled")
• Paul Pierce, NBA for touting EMAX tokens
• Kim Kardashian, for touting EMAX tokens

Here is a sampling of companies the SEC has filed a civil suit against

• BlockFi
• BitConnect
• LBRY
• Ripple Labs
• Terraform Labs
• Nexo Capital
• Genesis Global Capital
• Gemini Trust Company
• Coinbase
• Kraken

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