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Regulation and Compliance > Federal Regulation > SEC

SEC to Nearly Double Crypto Unit

By Melanie Waddell

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The Securities and Exchange Commission said Tuesday that it will add 20 positions to its newly named Crypto Assets and Cyber Unit — as well as expand the unit’s enforcement focus — to protect investors in crypto markets and from cyber-related threats.

The unit, formerly called the Cyber Unit, is housed with the Division of Enforcement and will grow to 50 dedicated positions.

“The U.S. has the greatest capital markets because investors have faith in them, and as more investors access the crypto markets, it is increasingly important to dedicate more resources to protecting them,” said SEC Chairman Gary Gensler in a statement.

The Division of Enforcement’s Crypto Assets and Cyber Unit “has successfully brought dozens of cases against those seeking to take advantage of investors in crypto markets,” Gensler said. “By nearly doubling the size of this key unit, the SEC will be better equipped to police wrongdoing in the crypto markets while continuing to identify disclosure and controls issues with respect to cybersecurity.”

Since its creation in 2017, the unit has brought more than 80 enforcement actions related to fraudulent and unregistered crypto asset offerings and platforms, resulting in monetary relief totaling more than $2 billion, the SEC reported.

The expanded Crypto Assets and Cyber Unit will focus on investigating securities law violations related to:

  • Crypto asset offerings;
  • Crypto asset exchanges;
  • Crypto asset lending and staking products;
  • Decentralized finance (DeFi) platforms;
  • Non-fungible tokens (NFTs); and
  • Stablecoins.

The expansion is “unprecedented,” John Reed Stark, president of John Reed Stark Consulting and former chief of the SEC’s Office of Internet Enforcement, said Tuesday on LinkedIn. “For promoters of Crypto, DeFi, NFTs, stablecoins and other Web3 nonsense, get ready for an SEC enforcement onslaught. And I know what I am talking about here.”

Gurbir Grewal, director of the SEC’s Division of Enforcement, added that the Crypto Assets and Cyber Unit will continue to tackle cyber-related threats to markets. “Crypto markets have exploded in recent years, with retail investors bearing the brunt of abuses in this space,” he said in the statement. “Meanwhile, cyber-related threats continue to pose existential risks to our financial markets and participants.”

Adding 20 positions to the Crypto Assets and Cyber Unit “will bolster the ranks of its supervisors, investigative staff attorneys, trial counsels and fraud analysts” in the agency’s Washington headquarters as well as several regional offices, Grewal said.

Melanie Waddell

@Think_MelanieW

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