Scams and other forms of crypto misuse have proliferated.
SEC is better equipped than ever to pursue securities law violations.
Previously known as the “Cyber Unit,” the US Securities and Exchange Commission (SEC) said on Tuesday that it would more than quadruple the size of its cryptocurrency enforcement section by creating an additional 20 posts. Because of the increase in staff, the SEC is better equipped than ever to pursue securities law violations involving new crypto products. Federal regulators say they’ve had an obligation to protect investors from scams taking advantage of the rising cryptocurrency business.
Response to Recent Surge in Scams
Scams and other forms of crypto misuse have proliferated in response to the increasing availability of cryptocurrencies to the general public. For example, in a rug pull scam, the perpetrators solicit investment, promise large profits, and then disappear with the money, as was recently the case with a collection of 3D avatars called Frosties and a crypto token based on the Netflix popular program Squid Game.
Staking and lending platforms, decentralized finance (DeFi) services, stablecoins, and NFTs are of particular interest to the SEC. The Securities and Exchange Commission (SEC) has announced the creation of several new roles, including fraud analysts, investigators, and trial lawyers, among others.
A common theme in Gensler’s remarks as SEC head since 2021 is the need for more substantial authority and resources to regulate cryptocurrencies. Gensler’s growth of the crypto enforcement team is a good thing, but it’s not apparent whether it’s adequate to cover the agency’s broad range of goals in the area.
For example, before, Gensler cited 6,000 new goods and services that might come within the purview of the SEC’s jurisdiction and the SEC’s role in evaluating these products and services.