The U.S. Securities and Exchange Commission (SEC) announced the launch of the Cyber and Emerging Technologies Unit (CETU) to combat cyber-related fraud and protect retail investors from risks in emerging technologies.
CETU Takes Charge
Headed by Laura D’Allaird, CETU replaces the Crypto Assets and Cyber Unit and includes a team of roughly 30 fraud specialists and attorneys working across multiple SEC divisions. According to the official press release, CETU will leverage its staff’s fintech and cybersecurity expertise to address misconduct in securities transactions. The newly established enforcement unit’s priorities include combating fraud involving artificial intelligence, machine learning, and blockchain technology, as well as preventing crypto-related scams. The focus will also be on cyber threats like hacking for material nonpublic information, retail brokerage account takeovers, and fraudulent schemes using social media, the dark web, or fake websites. Additionally, CETU will ensure regulated entities comply with cybersecurity rules and scrutinize public issuers for misleading cybersecurity disclosures for investor protection and market integrity. In an official statement, Acting Chairman Mark T. Uyeda stated, "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."
SEC’s Legal Shifts
The SEC’s creation of the CETU comes amid a series of positive developments from the agency. Under Uyeda, the SEC recently voluntarily dismissed its appeal of a lawsuit challenging its dealer rule expansion, a move welcomed by industry participants who viewed the rule as an indirect attempt to regulate crypto trading firms. Additionally, the SEC’s recent court filings in enforcement cases against Binance, Coinbase, and Lejilex requested stays, citing the agency’s efforts to develop a crypto regulatory framework, which is expected to pave the way for more constructive resolutions.
The Future of Crypto Regulation
These developments have further fueled speculation about a possible withdrawal of the Ripple case. The actions of the new unit and changes in the SEC’s approach are expected to streamline crypto market regulation and create a safer and more transparent environment for investors.
The creation of CETU signifies SEC’s commitment to tackling cyber fraud and investing in investor protection amidst new challenges and technological advancements.
