SEC Expands Enforcement Unit Focused on Abuses in Crypto Markets
Commentary by Ilan T. Graff
The SEC added 20 new positions to the Division of Enforcements Crypto Assets and Cyber Unit. The Unit combats fraud and other abuses in crypto markets.
The SEC stated that it will grow the Unit's total headcount to 50, which will include new supervisors, investigative staff attorneys, trial counsel and fraud analysts.
The SEC stated that the additional resources will allow the Unit to prioritize investigating securities violations related to:
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crypto asset offerings;
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crypto asset exchanges;
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crypto asset lending and staking products;
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decentralized finance platforms;
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non-fungible tokens; and
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stablecoins.
In the announcement, SEC Chair Gary Gensler said that by "nearly doubling the size of [the] 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."
Commentary
Although the SEC has been slow to develop clear rules for the burgeoning digital asset industry, it has put the weight of its enforcement authority behind a series of actions consistent with SEC Chair Gensler's view that crypto assets are subject to regulation as securities. The additional investment in crypto enforcement should be complemented by thoughtful rulemaking to give entities and individuals clear notice of how best to avoid the scrutiny of the newly expanded and renamed Crypto Assets and Cyber Unit.