SEC Extends 2001 Ban to Crypto, Bars Bilzerian From Token Fundraising
SEC Wins Fresh Round Against Bilzerian’s Crypto Pivot
The SEC secured a new judicial block this week when Judge Royce Lamberth barred Paul Bilzerian—already under a 2001 permanent injunction—from using digital assets to skirt his long-standing securities ban. The ruling keeps the 22-year-old enforcement order alive and signals that courts will still treat crypto as just another vehicle for the same old securities violations.
The case began when the Commission learned Bilzerian had begun promoting a blockchain project that would raise funds through a new token, effectively resurrecting the very conduct he was enjoined from repeating. Bilzerian argued that the injunction, written two decades ago, could not reach an asset class that did not exist at the time. The SEC countered that the order’s language—“any security” and “directly or indirectly”—is deliberately technology-neutral. Judge Lamberth agreed, holding that the plain wording of the injunction sweeps in tokens that meet the Howey test and that Bilzerian remains personally bound by its terms.
The immediate effect is that Bilzerian and his entities must cease any token-related fundraising, marketing, or advisory activity. Failure to comply exposes them to contempt sanctions, including asset freezes and daily fines. More broadly, the decision reinforces the SEC’s view that older enforcement orders can be applied to blockchain projects without new rulemaking, giving the agency a ready-made tool against repeat offenders who migrate from stocks to tokens.
For crypto markets, the ruling widens perceived regulatory risk for anyone previously sanctioned in traditional finance. Exchanges and DeFi protocols that onboard such individuals—or accept their tokens—now face secondary-liability exposure. Stablecoin issuers and launch-pad platforms may add compliance layers to screen wallets linked to enjoined parties, raising onboarding costs and slowing liquidity for affected projects.
Traders should treat legacy enforcement orders as evergreen red flags rather than dusty relics.
