Despite ongoing discussions on social media suggesting otherwise, financial crimes remain illegal, as evidenced by the Securities and Exchange Commission’s (SEC) continued efforts to address fraudulent activities in the blockchain sector. In a strategic move, the regulatory body has allocated additional resources to combat crypto-related fraud, reinforcing its stance on maintaining market integrity.
The SEC has announced the establishment of the Cyber and Emerging Technologies Unit (CETU), which will replace the Crypto Assets and Cyber Unit. This newly formed division will be led by Laura D’Allaird and will comprise a team of 30 fraud specialists and attorneys working collaboratively to tackle blockchain-based fraud and misconduct. The regulatory body emphasized that this unit will not only safeguard investor interests but also foster capital formation and market efficiency by eliminating fraudulent activities that undermine technological advancements.
Rising Fraud in the Crypto Sector Demands Stricter Measures
The launch of CETU comes at a critical juncture for the cryptocurrency industry, which has witnessed a surge in fraudulent schemes. While the sector has long been associated with various scams, the emergence of politically affiliated memecoins such as MELANIA and LIBRA has amplified concerns, as these pump-and-dump schemes have targeted unsuspecting investors.
Beyond memecoin-related fraud, organized cybercriminal groups have intensified their activities. One notable instance involved the Lazarus Group, a North Korea-linked hacking collective, which recently executed the largest theft in cryptocurrency history. This attack led to the theft of $1.5 billion from centralized exchange Bybit, surpassing the infamous March 2003 bank heist in which Saddam Hussein orchestrated the theft of $1 billion from the Central Bank of Iraq.
Expanded Focus on AI, Social Media, and Cybersecurity
In addition to tackling blockchain-based fraud, CETU will broaden its scope to address other emerging financial crimes. The unit will focus on fraudulent activities facilitated through artificial intelligence (AI) and social media, as well as hacking incidents involving unauthorized access to nonpublic information and retail brokerage account takeovers. Moreover, it will enhance oversight of the cybersecurity measures adopted by regulated financial entities to mitigate risks associated with digital assets.
Laura D’Allaird, who previously served as co-chief of the Crypto Assets and Cyber Unit, will continue her leadership role in this expanded division. With its reinforced mandate, CETU aims to strengthen regulatory enforcement and restore confidence in emerging financial technologies by curbing illicit activities within the industry.
