SEC launches cyber unit to shield retail crypto investors

The U.S. Securities and Exchange Commission (SEC) has announced the establishment of a new Cyber and Emerging Technologies Unit (CETU) to combat cyber misconduct and safeguard retail investors from fraud in emerging technology spaces.

The CETU will focus on protecting investors from bad actors in areas like blockchain, crypto assets, artificial intelligence (AI), and cybersecurity.

The new unit consists of approximately 30 fraud specialists and attorneys from various SEC offices.

CETU replaces the former Crypto Assets and Cyber Unit, which was responsible for bringing enforcement actions against fraudulent and unregistered crypto asset offerings.

Laura D’Allaird, who previously helmed the Crypto Assets and Cyber Unit, will lead CETU.

According to Acting SEC Chair Mark Uyeda, the CETU will "not only protect investors but will also facilitate capital formation and market efficiency by clearing the way for innovation to grow."

He added that the unit would "root out those seeking to misuse innovation to harm investors and diminish confidence in new technologies."

CETU’s priorities include fraud committed via emerging technologies (AI and machine learning), social media, the dark web, and false websites.

It will also address hacking incidents, retail brokerage account takeovers, public issuer fraudulent disclosure related to cybersecurity, and compliance with cybersecurity rules.

The SEC’s announcement comes amid increasing concerns about crypto scams and illicit activities.

Chainalysis estimates that illicit addresses received $40.9 billion in crypto assets in 2024.

Commissioner Hester Peirce has issued a warning to memecoin traders, cautioning that the SEC might not provide a regulatory backstop.