The U.S. Securities and Exchange Commission initiated a nearly 800% litigation surge on the cryptocurrency sector in October, according to an analysis of data collected by Law.com Trend Detection.

David Elsberg, an Elsberg Baker & Maruri partner in New York and a securities litigation expert, said that attorneys can expect a slowdown in these types of enforcement actions, meaning fewer matters in the pipeline for lawyers who litigate these types of cases, as Donald Trump put crypto front and center in his presidential campaigns in a way not seen before. 

“He has made public statements giving the impression that he will shape a regime that will be more supportive of crypto than perhaps any government we’ve seen so far around the globe,” Elsberg said in an email. “For example, Trump publicly announced that he will create a presidential crypto advisory council, and that the rules for crypto will be ‘written by people who love your industry, not hate your industry.’ And he came out strongly against SEC Chair Gary Gensler, who has brought dozens of proceedings against crypto firms.”

The Trend Detection data shows that the SEC brought at least six federal enforcement actions against crypto companies, which is well above the typical monthly average. Surges, such as the nearly 800% here, are identified by comparing caseloads for a given period to a baseline average after accounting for normal variations in the ebb and flow of case filings.

The SEC filed most of the complaints in the U.S. District Court in the District of Massachusetts, alleging that the companies engaged in “wash trading,” a form of market manipulation in which an entity simultaneously sells and buys the same financial instruments, creating a false impression of market activity without incurring market risk or changing the entity's market position.

The SEC claimed in the lawsuits that the wash trading was through the purchase and selling of digital assets, including Saitama Inu and Robo Inu. And some of the defendants, who include ZM Quant Investment, CLS Global FZC and Gotbit Hedge Fund, allegedly agreed to wash trade assets purportedly owned by NexFundAI, according to the complaint.

However, NexFundAI was apparently an undercover operation by the Federal Bureau of Investigation to look into crypto asset market manipulation.

Tal J. Lifshitz, a partner at Kozyak Tropin & Throckmorton in Coral Gables whose expertise includes digital asset litigation, said the larger takeaway from the data is that it highlights the “final countdown” on the Biden administration’s regulation-by-enforcement approach to crypto.

“All signs—most notably the recent surge in bitcoin’s price—point to a new day for bitcoin specifically and crypto in general,” Lifshitz said in an email. “I look forward to seeing the unshackled innovation of this sector in the years to come.”