SEC Increases Size of Crypto Division to Protect Investors Against Fraud

SEC Increases Size of Crypto Division to Protect Investors Against Fraud
A Bitcoin sign is displayed outside a store where the cryptocurrency is accepted as a payment method in San Salvador, El Salvador, on Feb. 1, 2022. Jose Cabezas/Reuters
Naveen Athrappully
Updated:

The U.S. Securities and Exchange Commission (SEC) announced that it has allocated 20 additional positions to the Crypto Assets and Cyber Unit to protect investors in the cryptocurrency markets against fraud and related abuse.

As more investors access crypto markets, it becomes “increasingly important” to dedicate more resources to protect them, SEC chair Gary Gensler said in a May 3 press release. The addition of new positions takes the total number of posts at the crypto unit to 50 and will bolster ranks of its investigative staff attorneys, fraud analysts, trial counsels, and supervisors at the SEC’s headquarters in Washington as well as other regional offices.

“The Division of Enforcement’s Crypto Assets and Cyber Unit has successfully brought dozens of cases against those seeking to take advantage of investors in crypto markets,” Gensler said.

“By nearly doubling the size of this key unit, the SEC will be better equipped to police wrongdoing in the crypto markets while continuing to identify disclosure and controls issues with respect to cybersecurity.”

Since the unit was created in 2017, it has initiated over 80 enforcement actions related to “fraudulent and unregistered crypto asset offerings and platforms.” This has brought more than $2 billion in monetary relief.

The expanded Crypto Assets and Cyber Unit will focus on investigating violations of securities law in relation to crypto asset offerings, platforms, lending and staking products, stable coins, NFTs, and decentralized finance platforms.

According to Gurbir S. Grewal, Director of the SEC’s Division of Enforcement, retail investors are the ones who bear the “brunt of abuses” in the digital currency and blockchain niche. He expressed hope that the bolstered unit will be able to protect investors and ensure “fair and orderly markets.”

Expansion of staff at Crypto Assets and Cyber Unit comes almost eight months after Gensler told the Senate Banking Committee that the agency needed a “lot more people” to assess whether the 6,000 digital projects they identified can be categorized as securities under American law.

“Currently, we just don’t have enough investor protection in crypto finance, issuance, trading, or lending,” Gensler told lawmakers in September. “Frankly, at this time, it’s more like the Wild West or the old world of ‘buyer beware’ that existed before the securities laws were enacted.”

Among high-profile crypto fraud cases the agency has tackled, a recent one involved charging two siblings in March for defrauding retail investors out of over $124 million. The duo collected the funds through two unregistered fraudulent offerings of securities of a digital token called Ormeus Coin.

According to a Pew Research survey from September 2021, 16 percent of U.S. adults have personally invested in, traded, or used a cryptocurrency.
Naveen Athrappully
Naveen Athrappully
Author
Naveen Athrappully is a news reporter covering business and world events at The Epoch Times.
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