SEC Announces Newly Named Crypto Assets And Cyber Unit – Fin Tech – United States

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The Securities and Exchange Commission (SEC) and its Chair Gary
Gensler are making good on their promise to increase oversight of
the crypto markets. On May 3, 2022, the SEC announced that it would
allocate 20 additional positions to the unit newly named as the
Crypto Assets and Cyber Unit within the Division of
Enforcement.1 This unit, formerly known as the
Cyber Unit, now has 50 dedicated positions to enforcing potential
securities law violations relevant to crypto asset offerings,
crypto asset exchanges, crypto asset lending and staking products,
DeFi platforms, non-fungible tokens (NFTs), and
stablecoins. In fact, the unit has brought more than 80 enforcement
actions related to crypto asset offerings and platforms, with more
than $2 billion in monetary relief, since its creation in 2017. The
unit has also brought actions against public companies and
companies registered with the SEC for failing to maintain adequate
cybersecurity controls or for failing to appropriately disclose
cyber-related risks and incidents. Chair Gensler believes “it
is increasingly important to dedicate more resources to
protecting” investors of crypto markets and expects that
“[b]y 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 control issues with respect
to cybersecurity.”2 

The overhaul and expansion of the Crypto Assets and Cyber Unit
is part of the SEC’s plan to regulate the crypto industry under
its authority. Only a month ago, Chair Gensler publicly remarked that the SEC will consider
several regulatory projects over crypto platforms, stablecoins, and
other crypto tokens. These changes signal that the SEC will focus
on cybersecurity, protection of investors, and maintaining
financial stability within the crypto markets. In this recent
announcement, Director Gurbir S. Grewal of the Division of
Enforcement stated that “[t]he bolstered Crypto Assets and
Cyber Unit will be at the forefront of protecting investors and
ensuring fair and orderly markets” against such
risks.3 Hence, Companies that conduct business or plan
to offer crypto-related products within the unit’s purview
should expect to see enhanced enforcement.

Winston & Strawn Law Clerk Jeremy Chu also
contributed to this blog post.

Footnotes

1. U.S. Securities and Exchange Commission, Press
Release, SEC Nearly Doubles Size of Enforcement’s
Crypto Assets and Cyber Unit
 (May 3, 2022),
https://www.sec.gov/news/press-release/2022-78.

2. Id.

3. Id.

The content of this article is intended to provide a general
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