SEC Expands Crypto and Cyber Enforcement Staff

Increasing policing of crypto markets and identification of cybersecurity issues

The U.S. Securities and Exchange Commission (SEC) is adding 20 additional staff positions to the unit responsible for protecting investors in the cryptocurrency markets and from cyber-related threats. As announced on May 3, 2022, the newly renamed Crypto Assets and Cyber Unit (formerly the Cyber Unit) in the Division of Enforcement will grow from 30 to 50 dedicated positions, adding to the ranks of supervisors, investigative staff attorneys, trial counsels, and fraud analysts, both in its headquarters in Washington, DC, and in several regional offices.

Gurbir S. Grewal, director of the SEC's Division of Enforcement, stated: "Crypto markets have exploded in recent years, with retail investors bearing the brunt of abuses in this space. Meanwhile, cyber-related threats continue to pose existential risks to our financial markets and participants."

In a similar vein, SEC Chair Gary Gensler said, "as more investors access the crypto markets, it is increasingly important to dedicate more resources to protecting them."

Key Takeaways

  • The SEC is expanding staff dedicated to protecting investors from crypto-related fraud and cyber threats.
  • The newly renamed Crypto Assets and Cyber Unit will grow from 30 to 50 positions.
  • Founded in 2017, the unit has brought more than 80 enforcement actions resulting in monetary relief of more than $2 billion.

Focus of the Crypto Assets and Cyber Unit

Since its creation in 2017, what is now called the Crypto Assets and Cyber 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. Going forward, the expanded unit will focus on investigating securities law violations related to:

Additionally, the unit has brought numerous actions against SEC registrants and public companies for failing to maintain adequate cybersecurity controls and for failing to appropriately disclose cyber-related risks and incidents. The unit will continue to take appropriate actions to mitigate the large and growing cyber-related threats to the markets in the United States.

Prior SEC Statements on Crypto and Cybersecurity

In a speech on April 4, 2022, SEC Chair Gary Gensler stated his belief that platforms for cryptocurrency trading and lending should be registered and regulated like traditional securities exchanges, and he indicated that the SEC is working on this initiative.

On March 30, 2022, the SEC's Division of Examinations announced that crypto and information security would be key areas of its own focus in 2022.

On March 9, 2022, the SEC proposed sweeping new mandatory corporate disclosures related to cybersecurity issues.

Article Sources

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  1. U.S. Securities and Exchange Commission. "SEC Nearly Doubles Size of Enforcement's Crypto Assets and Cyber Unit."

  2. Investopedia. "SEC Chair: Regulate Crypto Platforms Like Exchanges."

  3. Investopedia. "SEC Announces 2022 Examination Priorities."

  4. Investopedia. "SEC Proposes Mandatory Cybersecurity Disclosures."

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