SEC Replaces Crypto Unit With Team to Probe ‘Cyber-Related Misconduct’

The Securities and Exchange Commission has created a unit to protect retail investors against fraud.

The Cyber and Emerging Technologies Unit (CETU), announced by the commission (SEC) on Thursday (Feb. 20), replaces the regulator’s Crypto Assets and Cyber Unit, and will be staffed by approximately 30 fraud specialists and attorneys from multiple SEC offices. That’s compared to the roughly 50 people in the Crypto Assets and Cyber Unit.

Heading the new unit is Laura D’Allaird, a commission attorney who has spent several years with the SEC, including five years as senior counsel to the SEC enforcement division under the Trump and Biden administrations.

“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,” said Mark Uyeda, the commission’s acting chair.

“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 added. “It will root out those seeking to misuse innovation to harm investors and diminish confidence in new technologies.”

According to an SEC news release, the CETU will have a few priorities, including fraud committed with emerging technologies like artificial intelligence (AI) and machine learning (ML), or through the use of social media, the dark web, or “false websites.”

The unit will also target hacking to obtain “material nonpublic information,” retail brokerage account takeovers, fraud involving cryptocurrency assets and blockchain, regulated entities’ “compliance with cybersecurity rules and regulations,” and “public issuer fraudulent disclosure relating to cybersecurity.”

The announcement is the latest example of the changing attitudes towards crypto under the new administration. During the Biden administration, the SEC initiated several investigations into crypto companies, including high-profile firms such as Coinbase and Binance, amid a wave of fraud and criminal activity involving digital asset firms.

Eventually, crypto companies began looking to overseas markets, saying that the U.S. had become an inhospitable place for their industry. Then came the 2024 election campaign, with Donald Trump — who had once called crypto a “scam” — suddenly embracing the sector, and getting its support in return.

Now, crypto companies and lawmakers alike are calling for new legislation that allows for innovation in the sector while protecting consumers.