Top 5 SEC Enforcement Developments for August 2025

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:

• Recent SEC activity pursuing alleged fraud in the cryptocurrency space and limiting its jurisdiction over liquid-staking arrangements;
• A Ninth Circuit ruling that upheld the SEC’s “no-deny” settlement provision against a First Amendment challenge;
• An SEC settlement with a former day trader over spoofing scheme allegations;
• Recent SEC lawsuits pursuing insider trading claims in the pharmaceutical and food industries; and
• An SEC settlement with a registered investment adviser for allegedly failing to adequately disclose conflicts of interest between its advisers and clients.

In addition to these case-specific updates, we note that on August 21, 2025, the SEC announced the appointment of Judge Margaret “Meg” Ryan as Director of the Division of Enforcement. At the time of her appointment, Judge Ryan was a senior judge of the U.S. Court of Appeals for the Armed Forces whose previous work includes time in private practice and clerkships for Justice Clarence Thomas on the Supreme Court and Judge J. Michael Luttig of the U.S. Court of Appeals for the Fourth Circuit. 

1. SEC Continues Fraud Enforcement in the Crypto Space While Limiting Its Jurisdiction over Liquid-Staking Arrangements

On August 5, 2025, the SEC’s Division of Corporation Finance (the “Division”) issued a statement that “liquid staking activities” in connection with protocol staking do not involve the offer and sale of securities and are therefore generally outside the Division’s purview. Liquid staking allows users who have dedicated their assets to a blockchain network to maintain liquidity by generating derivative assets in the form of tokens based on the original “staked” asset. Users can then exchange or collateralize these tokens without disrupting the underlying assets staked to the blockchain. Applying the Howey “investment contract” test, the Division concluded that liquid staking arrangements should not be considered investment contracts, as liquid staking providers do not offer either entrepreneurial or managerial efforts to depositors of crypto assets and instead are “simply acting as an agent…on behalf of the Depositor.” This may represent a departure from previous SEC enforcement actions that brought charges involving certain forms of staking-as-a-service, although as the Division noted, its statement does not constitute a rule, regulation, guidance, or statement of the full SEC, and does not have any “legal force or effect.” Notwithstanding the above limitations, the Division carved out space to impose the SEC’s jurisdiction over liquid staking activities that extend further than administrative or ministerial acts.

Two actions in August confirmed that the Commission is not moving away from bringing cryptocurrency cases. On the same day the Division of Corporate Finance issued its statement regarding liquid staking services, the SEC entered an order accepting an offer of settlement from Huynh Tran Quang Duy—the founder and owner of MyConstant—to resolve claims that Huynh violated Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. In that case, the SEC alleged that Huynh falsely represented on MyConstant’s website that his company would invest funds in a low‑risk loan matching service, backed by crypto assets exceeding the value of the loan, promising annual returns of up to 10%. Those representations led to MyConstant raising over $20 million, much of which was allegedly used in ways inconsistent with Huynh’s representations. Without admitting or denying the SEC’s findings, Huynh agreed to pay $9.8 million in disgorgement and prejudgment interest, and a civil penalty of $750,000.

On August 26, 2025, the SEC secured a combined $46 million default judgment against cryptocurrency mining and trading entities MCC International Corp., CPTLCoin Corp., and Bitchain Exchanges and individual defendants Luiz Carlos Capuci, Jr. and Emerson Sousa Pires. In SEC v. MCC International Corp., et al., the court held that defendants must jointly disgorge nearly $28.5 million and pay prejudgment interest totaling nearly $7.8 million for allegedly inducing investments into their crypto‑asset mining and trading operations through a complex, multi‑level marketing scheme centered on the purchase of “mining packages.” In return for owning a “mining package,” MCC guaranteed a profit‑sharing arrangement which would be deposited into MCC back-office wallets. The scheme allegedly included instructing investors that in order to liquidate their investment, they must withdraw it via an MCC-created crypto asset made available on the asset trading platform Bitchain, which defendants allegedly failed to disclose was under their control and which allowed them to block MCC investors from liquidating their investments.

2. SEC’s “No-Deny Provision” Survives Ninth Circuit Challenge

On August 6, 2025, the Ninth Circuit upheld the SEC’s settlement policy, as codified in 17 C.F.R. § 202.5(e), against challenges based on the First Amendment and Administrative Procedure Act. Under Rule 202.5(e) (“the no-deny provision”), the SEC will not settle a civil enforcement action with a defendant unless the defendant agrees not to publicly deny the allegations. Since 1972, the SEC has routinely conditioned settlement on the defendant’s compliance with Rule 202.5(e), and, if the defendant violates the “no-deny provision,” then the SEC can request that the underlying case be re-opened.

In Powell et al. v. SEC, No. 24-1899 (9th Cir. 2025), individuals and free‑speech and civil liberties organizations asked the Ninth Circuit to review the SEC’s denial of their request to amend Rule 202.5(e). Petitioners argued that Rule 202.5(e)’s restriction on public denials is per se unconstitutional under the First Amendment because it operates as a content‑based prior restraint and limits an individual’s ability to criticize a federal agency.

The Ninth Circuit panel rejected Petitioners’ broad facial challenge, though the panel made clear its decision did not rule out the possibility of successful “as-applied” challenges. Applying the balancing framework from Town of Newton v. Rumery, 480 U.S. 386 (1987), the panel determined that Rule 202.5(e) is on its face only “a relatively narrow limitation on defendants’ speech.” The “no-deny provision” only limits speech that denies the SEC’s specific allegations against the defendant. Moreover, “the consequence for violating the Rule is not speech suppression or the automatic undoing of the settlement agreement, but only that the SEC may seek to reopen the civil enforcement proceedings.” Critically, the panel reasoned that Rule 202.5(e) generally functions like other waivers of constitutional rights by agreement, such as in the context of criminal plea deals or conditions of government employment. Thus, when defendants in SEC enforcement actions, who “are often sophisticated players…represented by counsel,” settle with SEC, they are making a voluntary choice in exchange for the “substantial benefits” of ending the litigation. The Ninth Circuit also rejected petitioners’ argument that the SEC’s adoption of Rule 202.5(e) violated the Administrative Procedure Act, holding that the SEC had statutory authority to enact the Rule without requiring the notice and comment process, and that the SEC provided a rational explanation for its decision not to amend the Rule.

3. SEC Secures Settlement with California Day Trader over Spoofing Scheme

On August 11, 2025, the SEC secured a roughly $358,000 settlement from former day trader Ryan N. Cole over allegations that Cole attempted to manipulate options prices through fake or “spoofed” orders. The SEC alleged Cole engaged in a multi‑step “spoofing” process. First, Cole would place thinly traded option orders that narrowed the spread between the National Best Bid and National Best Offer. This would induce other market actors to trade the targeted securities at prices manipulated by Cole’s options orders. Next, Cole would quickly execute immediate-or-cancel orders and then withdraw his option orders. This allegedly allowed Cole to profit by later obtaining and selling targeted options at the artificially manipulated price. The SEC charged Cole with violations of the Securities Act of 1933, the Securities Exchange Act of 1934, and Rules 10b-5(a) and (c) thereunder. The Court later ordered Cole to disgorge $234,803 and to pay prejudgment interest of $52,656 and a civil penalty of $70,441 pursuant to the settlement.

4. SEC Pursues Insider Trading in the Pharmaceutical and Food Sectors

On August 22, 2025, the SEC filed a complaint in the United States District Court for the District of New Jersey against five individuals alleging illegal insider tipping and securities trading in advance of the 2023 acquisition of Chinook Therapeutics, Inc. by a multi‑national pharmaceutical company. The SEC alleged that Defendant Ross Haghighat, a member of Chinook’s board of directors, provided material, non-public information about Chinook’s pending acquisition to the other defendants, all of whom are either family or friends of Haghighat. Each of the defendants has been charged with violations of Section 10(b) of the Exchange Act and Rule 10b-5 thereunder.

Also on August 22, 2025, the SEC settled charges against David J. Minson for alleged insider trading related to the September 2023 acquisition of Blue Apron Holdings, Inc. by Wonder Group, Inc. Between September 5 and 28, 2023, the SEC alleged that Minson traded Blue Apron securities based on insider information that he misappropriated from a family member who was also an executive at Blue Apron. Per the SEC’s order, Minson violated the antifraud provisions of Sections 10(b) and 14(e) of the Securities Exchange Act of 1934 and Rules 10b-5 and 14e-3(a) thereunder. Without admitting or denying the SEC’s findings, Minson consented to the cease-and-desist order and agreed to pay a disgorgement of $550,842.13, prejudgment interest of $41,606.34, and a civil penalty of $550,842.13.

5. SEC Secures $19.5 Million Settlement with Vanguard Advisers, Inc. over Conflict Disclosures

On August 29, 2025, the SEC entered an order accepting Vanguard Advisers, Inc.’s $19.5 million offer of settlement to resolve claims that Vanguard’s Personal Advisor Services (“PAS”) program violated Sections 206(2) and 206(4) of the Investment Advisers Act and Rule 206(4)-7 thereunder. 

The PAS program is a fee-based advisory service offered to Vanguard’s retail clients. The SEC alleged that Vanguard created a conflict of interest between its PAS advisors and their clients by incentivizing the advisors through bonuses, merit raises, and other compensation programs to recommend that their clients enroll in and remain in the PAS program. The SEC alleged that from August 2020 through December 2023, Vanguard failed adequately to disclose the financial incentives to prospective clients. 

Vanguard agreed to the entry of the order without admitting or denying the SEC’s findings, and, in addition to the civil penalty of $19.5 million, will be censured and must cease and desist from any further violations of the Investment Advisers Act.