SEC Unveils New Unit to Combat Crypto Crime

The U.S. Securities and Exchange Commission (SEC) has announced the launch of a new unit dedicated to combating crypto-related crime, signaling a more proactive approach to regulating the rapidly evolving digital asset landscape. The Cyber and Emerging Technologies Unit (CETU) will replace the Crypto Assets and Cyber Unit and will be led by Laura D’Allaird, an attorney with extensive experience in crypto-related cases.



CETU will integrate approximately 30 fraud specialists and attorneys from various SEC offices, allowing the unit to allocate enforcement resources more effectively and facilitate capital formation and market efficiency. The new unit will focus on several key areas to combat fraud involving blockchain technology, cryptocurrencies, and artificial intelligence:

1. Fraud related to artificial intelligence and machine learning: CETU will ensure that AI-driven trading models and automated financial advisory platforms operate within established regulatory frameworks. This includes monitoring for fraudulent schemes that exploit social media and the dark web to mislead investors.
2. Hackers obtaining material nonpublic information: The unit will target criminals using social media, the dark web, or false websites to con retail investors. This includes preventing unauthorized takeovers of retail brokerage accounts, which often result in the compromise of investors’ financial assets.
3. Compliance with cybersecurity regulations: CETU will focus on ensuring that financial institutions adhere to cybersecurity regulations and best practices to mitigate risks associated with emerging technologies. This includes preventing unauthorized access to systems and protecting sensitive data.
4. Preventing fraudulent schemes involving blockchain technology and cryptocurrencies: The unit will work to prevent and investigate fraudulent schemes involving blockchain technology and cryptocurrencies, such as Ponzi schemes, pump-and-dump schemes, and market manipulation.
5. Collaboration with other regulatory bodies and international counterparts: CETU will coordinate with federal departments and agencies, including the Commodity Futures Trading Commission, and state and international counterparts to share information and collaborate on investigations and enforcement actions.

The launch of CETU comes amid a growing influence of emerging technologies, including artificial intelligence, machine learning, and blockchain, on financial markets. The new unit aims to protect retail investors, facilitate capital formation, and maintain market efficiency by clearing the way for innovation to grow. Acting SEC Chairman Mark Uyeda emphasized the unit’s role in safeguarding investors and fostering market integrity.

CETU’s creation will allow the SEC to allocate enforcement resources more effectively and complement the work of the Crypto Task Force led by Commissioner Hester Peirce. By working together, these two units can leverage their respective strengths and expertise to address the unique challenges and opportunities presented by the rapidly evolving crypto landscape.

In conclusion, the launch of the Cyber and Emerging Technologies Unit signals a more proactive approach to regulating the crypto space, with a focus on preventing fraud and fostering responsible innovation within the confines of the Commission’s authority. By collaborating with other regulatory bodies and international counterparts, CETU aims to protect investors, facilitate capital formation, and maintain market efficiency while addressing the evolving nature of crypto-related crimes.