SEC creates division to fight cryptocurrency fraud

What’s new? The US Securities and Exchange Commission (SEC) has announced the creation of the Cyber and Emerging Technologies Unit (CETU) (CETU) to combat cyber behavior and enhance retail investor protection in the emerging technology sector.

According to an SEC press release, the CETU will replace the Crypto Assets and Cyber Unit. Under the leadership of Laura D’Allaird, it will bring together about 30 fraud specialists and attorneys from various SEC offices to strengthen security measures and enforcement.

What else is known? The CETU was formed amid the growing influence of new technologies, including artificial intelligence (AI), machine learning, and blockchain, on financial markets, increasing the need for enhanced regulatory oversight.

Acting SEC Chairman Mark Uyeda emphasized the division’s role in protecting investors and maintaining market efficiency:

“Under Laura’s leadership, this new unit will complement the work of the Crypto Task Force led by Commissioner Hester Peirce. Importantly, the new unit will also allow the SEC to deploy enforcement resources judiciously.”

In addition to investor protection, CETU will support capital formation and market efficiency by ensuring that technological advances meet regulatory standards.

What are the unit’s objectives? The SEC has outlined several key areas where CETU will focus its enforcement efforts. One of the main goals is to combat fraud related to artificial intelligence and machine learning, ensuring that AI-based trading models and automated financial advisory platforms operate within established regulatory frameworks.

The unit will monitor fraudulent schemes that use social media and the darknet to mislead investors and investigate cyber intrusions aimed at obtaining material non-public information. Another priority for CETU will be to prevent unauthorized takeovers of retail brokerage accounts, which often result in the compromise of investors’ financial assets.

CETU will also focus on ensuring that financial institutions comply with cybersecurity regulations and adhere to best practices to mitigate risks associated with new technologies.