May 3, 2022 - Economy & Business

U.S. regulators adding new wave of crypto cops

Illustration of hand grabbing a 1 out of a group of 0s
Illustration: Eniola Odetunde/Axios

The U.S. Securities and Exchange Commission (SEC) announced today that it is adding 20 positions to the enforcement unit overseeing crypto.

Why it matters: Investment and usage of cryptocurrency has dramatically increased. Crypto.com estimated that the total number of global crypto users fell just shy of 300 million in December.

  • There's a lot of hustlers in any gold rush and that's doubly true in crypto.

Details: The SEC renamed its Cyber Unit to the Crypto Assets and Cyber Unit with the new announcement.

  • Kristina Littman is stepping down as the SEC's Cyber Unit chief, with plans to leave in early June, Axios reported in Pro Rata today.
  • The agency "has brought more than 80 enforcement actions related to fraudulent and unregistered crypto asset offerings and platforms," the release says.
  • Axios is looking into how many of the fines agreed to in consent orders have actually been paid.
  • Most recently, the agency charged the creators of a 2017 initial coin offering (ICO) called Block Bits with fraudulent activity, raising nearly $1 million from 20 investors. The local U.S. Attorney's office announced parallel criminal action.

What they're saying: "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," said SEC Chair Gary Gensler.

  • "Cyber-related threats continue to pose existential risks to our financial markets and participants," said Gurbir S. Grewal, Director of the SEC’s Division of Enforcement.

Context: This news comes on a previous signal from the agency's chief that he wanted to ramp up action in the cryptocurrency space. In April, Gensler gave a speech in Philadelphia where he outlined four areas of crypto-specific interest for his agency:

  • Boosting protections for retail crypto traders.
  • Enhancing custody requirements on companies that hold other people's assets.
  • Firewalling market making off from other activities.
  • Collaborating with the commodities regulator.

Thought bubble: For some background on the SEC, this interview with Gensler by Jon Stewart is worth watching.

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