SEC Doubles Cyber Unit Staff to Protect Crypto UsersDepartment, Now Named the Crypto Assets and Cyber Unit, Will Have 50 Positions
The U.S. Securities and Exchange Commission has allocated 20 additional positions to protect investors in cryptocurrency markets from cyber-related threats.
The SEC says that the newly named Crypto Assets and Cyber Unit, formerly known as the Cyber Unit, in the Division of Enforcement, will grow to 50 dedicated positions.
"The U.S. has the greatest capital markets because investors have faith in them, and as more investors access the crypto markets, it is increasingly important to dedicate more resources to protecting them," says SEC Chair Gary Gensler.
This dedicated unit has successfully brought dozens of cases against those seeking to take advantage of investors in crypto markets, he says.
"By 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 controls issues with respect to cybersecurity."
The SEC says that the addition of 20 new positions to the unit will boost the ranks of its supervisors, investigative staff attorneys, trial counsels and fraud analysts in the agency's headquarters in Washington, D.C. and in other regional offices.
The unit was first launched in 2017 and has brought more than 80 enforcement actions related to fraudulent and unregistered crypto-asset offerings and platforms, resulting in monetary relief totaling more than $2 billion, the SEC says.
The new unit, it adds, will leverage the agency's expertise to ensure investors are protected in cryptocurrency markets and will focus on investigating securities law violations related to crypto-asset offerings, crypto-asset exchanges, crypto-asset lending and staking products, decentralized finance or DeFi platforms, non-fungible tokens or NFTs, and stablecoins.
"The news that the SEC is hiring an additional 20 positions to combat cybercrime is a clear recognition of the spiraling issue of crypto theft in decentralized finance," Rick Deacon, CEO at cybersecurity firm Interlock, tells Information Security Media Group. "The insecurity of the internet user - whether browsing from home, work, or on the go - has reached pandemic proportions. The threat has grown with surging investment into cryptocurrency and NFTs."
Quoting a Federal Trade Commission report, Deacon says that between 2020 and 2021, cryptocurrency theft rose 516% to $3.2 billion. In 2021, the reported median loss for victims was $1,900.
"It's not enough to target the crimes taking place. We must employ prevention tactics and promote best practices for secure browsing and purchasing of crypto and NFTs. Consumer awareness of cybercrime approaches is alarmingly immature while attackers become more sophisticated in their tactics each day," he says.
The SEC says that the unit had previously taken actions against SEC registrants and public companies for failing to maintain adequate cybersecurity controls and failing to appropriately disclose cyber-related risks and incidents. It will continue to tackle the cyber-related threats to the U.S. markets, the SEC says.
"Crypto markets have exploded in recent years, with retail investors bearing the brunt of abuses in this space. Meanwhile, cyber-related threats continue to pose existential risks to our financial markets and participants," says Gurbir S. Grewal, director of the SEC's Division of Enforcement. "The bolstered Crypto Assets and Cyber Unit will be at the forefront of protecting investors and ensuring fair and orderly markets in the face of these critical challenges."
Good for Crypto Market?
"This is great news! A lot of the cryptocurrency market is against any regulations, including those that would safeguard their own value, but that's not the vast majority of the rest of the world. The cryptocurrency world is full of outright scams, criminals and ne'er-do-well-ers," says Roger Grimes, data-driven defense evangelist at cybersecurity firm KnowBe4.
Grimes adds that even legal and very sophisticated financiers and investors are taking advantage of the immaturity of the cryptocurrency market. He says, "They can't make a lot of money doing arbitrage in any of the other more mature markets, but there are billions to be made in the cryptocurrency market. All of it siphons money and value from hardworking people into the pockets of criminals and a few percent of participants."