On February 20, 2025, the U.S. Securities and Exchange Commission (SEC) announced the establishment of the Cyber and Emerging Technologies Unit (CETU) to combat cybercrime and fraud in the blockchain and cryptocurrency sectors.
SEC establishes new unit to combat cybercrime in cryptocurrency sector
The CETU will succeed the SEC’s former Crypto Assets and Cyber Unit and focus on safeguarding retail investors from fraud and misconduct within emerging technologies. The new unit will comprise approximately 30 fraud specialists and attorneys from various SEC offices, with Laura D’Allaird, who previously led the Crypto Assets and Cyber Unit, appointed as the head.
Acting SEC Chairman Mark Uyeda emphasized that the unit aims not only to protect investors but also to promote innovation by ensuring a clear and efficient market. The CETU will investigate fraudulent activities associated with securities transactions, placing particular emphasis on scams involving social media, the dark web, and deceptive websites.
The creation of the CETU coincides with ongoing challenges in the cryptocurrency industry, including significant incidents of fraud. A notable case is the LIBRA meme coin scandal involving Argentine President Javier Milei, which resulted in over $250 million lost after the coin experienced a rapid pump and dump. The decentralized exchange, Jupiter, confirmed that the launch of the Milei-endorsed coin was well-known within the meme coin community, raising concerns of insider trading and fraud.
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In 2024, the SEC executed 33 enforcement actions related to crypto fraud, resulting in penalties amounting to $8.2 billion, largely attributed to the case against Terraform Labs and its founder, Do Kwon. The SEC’s stringent regulatory stance has been amplified under the Biden administration, which has seen an increase in efforts to regulate digital assets and safeguard investors from fraud.
However, some industry experts advocate for improvements in the SEC’s regulatory approach. According to Bloomberg, Nic Puckrin, co-founder of The Coin Bureau, pointed out the need for clearer regulations, particularly regarding meme coins, which have been increasingly associated with scams and pump-and-dump schemes. The SEC’s new unit seeks to enhance oversight and transparency while navigating the complex landscape of cryptocurrencies and emerging technologies.
The CETU’s agenda will leverage its team’s extensive fintech and cyber experience to address misconduct in several priority areas, including fraud committed through emerging technologies such as artificial intelligence and machine learning, the use of social media and false websites for fraud, hacking to gain nonpublic information, takeovers of retail brokerage accounts, blockchain technology fraud, and compliance with cybersecurity regulations by regulated entities.
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