Biggest crypto legal cases of 2024: Genesis, Binance, Celcius

In the midst of an incredible year of growth that marks 2024 as the best year yet for cryptocurrency, there have also been some notable high-profile legal cases that have highlighted the sector's vulnerabilities and growing pains.

At Learn Crypto, we often discuss how regulatory bodies around the world are stepping up their efforts to enforce compliance – usually viewed as negative by crypto proponents but on the one hand, regulations have often sought to protect investors.

The rapid growth of the cryptocurrency market has often outpaced regulatory frameworks. This has led to a series of high-stakes legal confrontations. From fraud and market manipulation allegations, to regulatory crackdowns on unregistered securities, these cases show us how challenging it can be to integrate digital assets into traditional financial systems.

These legal battles have not only captured the public’s attention but have also set important precedents for the future of cryptocurrency regulation. This article – done in two parts – delves into some of the most significant legal cases of the year, providing insights into their implications for the crypto industry.

As we examine the first three of the most notable legal battles of 2024, it becomes clear that the outcomes of these cases will have far-reaching consequences for the future of cryptocurrency.

The Genesis Heist

In August 2024, one of the oldest names in the business was rocked by one of the most sophisticated phishing attacks the industry has seen, resulting in the theft of some $243 million from a Genesis creditor.

This incident, dubbed the "Genesis Heist", underscored the always-present security vulnerabilities within the crypto sector. In it, cybercriminals employed highly convincing social engineering tactics, impersonating support representatives from Google and Gemini, two other well-known entities in the tech and crypto spaces. They successfully tricked the victim into transferring funds to a compromised wallet, resulting in one of the largest heists in the history of cryptocurrency.

The Genesis Heist is a stark reminder of the inherent risks associated with digital assets. Despite advancements in blockchain security, human factors such as susceptibility to phishing attacks remain a significant weakness. This incident has prompted a renewed focus on enhancing security measures and educating users about the dangers of social engineering. In response, both Genesis and Gemini have pledged to implement stricter security protocols and conduct extensive user education campaigns to prevent similar attacks in the future.

Comparatively, previous years have seen other notable security breaches, such as the 2016 Bitfinex hack, where approximately BTC 120,000were stolen, Then there’s the grandfather of all exchange hacks – the 2014 Mt Gox incident, which resulted in the loss of BTC 850,000.

While these earlier incidents involved vulnerabilities in the exchange systems themselves, the Genesis Heist demonstrates how cybercrimlnals are quick to evolve in tactics,, focusing on exploiting human psychology rather than technological flaws. This shift underscores the need for a holistic approach to security that addresses technical and human factors.

US SEC vs Binance

One of the most consequential legal battles of 2024 actually began in 2023. It involved the US Securities and Exchange Commission (SEC) suing Binance, the world's largest cryptocurrency exchange.

The SEC's allegations centred on Binance operating an unregistered exchange and offering illegal securities, including the BUSD stablecoin. This case culminated in a record-breaking $4.3 billion settlement, marking one of the largest enforcement actions in the history of cryptocurrency regulation. As part of the settlement, Binance's former CEO Changpeng Zhao stepped down and pleaded guilty to at least one felony charge, further intensifying the case's impact on the industry.

This year, a US judge extended the lawsuit into 2026, allowing the SEC to amend its complaint to include Binance’s behaviour and conduct.

The SEC's case against Binance represents a significant escalation in regulatory scrutiny over the crypto market. The Commission argued that Binance had flouted US securities laws, operating outside the regulatory framework designed to protect investors.

This case has far-reaching implications, not just for Binance but for the broader crypto industry, highlighting the regulatory risks that exchanges and other crypto entities face. While the settlement underscores the SEC's commitment to enforcing securities laws in the crypto space, setting a precedent for future regulatory actions, its insistence that Binance pays fines and returns “ill-gotten gains” is a warning to others that past crimes and profit will be pursued by the law.

In comparison to previous years, the SEC's action against Binance stands out both in scope and impact. Earlier regulatory actions, such as the 2020 charges against Ripple Labs for allegedly selling unregistered securities through its XRP token, set the stage for more aggressive enforcement. The Ripple case, which involved a $1.3 billion lawsuit, was significant but did not match the scale of the Binance settlement. The Binance case, with its multibillion-dollar fine and the personal accountability of its CEO, sends a clear message to the industry about the seriousness of regulatory compliance.

The fallout from the SEC vs Binance case is likely to echo throughout the crypto market for years to come. Exchanges and other crypto businesses are expected to bolster their compliance efforts, navigating a more stringent regulatory environment. This case may also prompt legislative changes, as lawmakers seek to establish clearer guidelines for the operation of crypto exchanges and the issuance of digital assets. As the dust settles, the Binance case will serve as a landmark moment in the ongoing evolution of cryptocurrency regulation.

The Celsius fraud

The bankruptcy of crypto lender Celsius in 2024 brought to light multiple issues that have plagued the platform, culminating in criminal charges against its former CEO, Alex Mashinsky. Once a leading light in the cryptocurrency lending space, Mashinsky now faces allegations of fraud, market manipulation, and misleading investors about the financial health of Celsius. The company's collapse left thousands of investors in the lurch, unable to access their funds.

Mashinsky's trial was set to begin in January 2025 but instead, he pled guilty in December 2024. The charges against him include misrepresenting the risks associated with Celsius's lending products and engaging in deceptive practices to maintain the platform's image. 

Celsius should end up becoming a focal point for discussions about the need for stricter oversight and transparency in the crypto lending sector.

The Celsius case shares one similarity with the collapse of the Canadian exchange QuadrigaCX in 2019, where the sudden death of its CEO, Gerald Cotten, led to the loss of $190 million in customer funds. Both prove that there is a single point of failure associated with centralisation and the lack of regulatory oversight in the crypto space.