The SEC has reinforced its new, more crypto-friendly approach toward digital assets by re-launching its crypto-enforcement unit under a new name, with a broader portfolio of responsibilities and a smaller staff to fulfill them.
The agency today announced the formation of a 30-person Cyber and Emerging Technologies Unit (CETU) to combat fraud and other misconduct committed using AI, machine learning, crypto assets and other emerging technologies, as well as more traditional media including the misinformation communicated over social medial spoofed websites or attacks that give hackers control of retail trading accounts.
The new unit will also be responsible for enforcing the compliance of regulated companies with cybersecurity regulations including the publication of false claims about AI or cybersecurity.
The 30-person CETU unit will replace the SEC Enforcement Division’s 50-person Crypto Assets and Cyber Unit that was formed in 2022 to fulfill then-SEC chair Gary Gensler’s priority on crypto-related fraud and was effectively disbanded earlier this month, according to a Feb. 5 report in the New York Times.
Former crypto enforcement unit co-chief Laura D’Allaird will lead the new group, according to the SEC, which provided no new information on the role of the SEC’s former top crypto litigator Jorge Tenreiro, who was reassigned to another role in the SEC’s information technology unit earlier this month as part of the dissolution of the Crypto Assets unit.
The new unit will complement the Crypto Task Force the agency launched Jan. 21 to reevaluate the agency’s approach to cryptocurrency investments and the regulation of digital assets, according to acting chair Mark Uyeda, who said the new organization would allow the SEC to “deploy enforcement resources judiciously.”
“The unit will not only protect investors but will also facilitate capital formation and market efficiency by clearing the way for innovation to grow,” Uyeda said in the SEC announcement. “It will root out those seeking to misuse innovation to harm investors and diminish confidence in new technologies.
The old unit launched approximately 100 enforcement actions against crypto products and players during Gensler’s tenure as chair.
SEC commissioner and Crypto Task Force chair Hester Peirce said that focus on enforcing old rules on new digital-asset classes caused big problems for the industry that will take time to unravel under the agency’s new leadership.
A new approach to regulation and re-evaluation of enforcement priorities mean the SEC will be much more receptive to crypto-related products than it was under the old administration Peirce said following the announcement of the Crypto Task Force. Those changes do not mean crypto companies don’t have to worry about regulation, however.
“SEC rules will not let you do whatever you want, whenever you want, however you want,” she wrote in her introduction of the Task Force. “The commission will use its enforcement tools when necessary to pursue noncompliance.”
