- The SEC dissolves its dedicated crypto enforcement unit, replacing it with a broader cyber-focused division.
- The Cyber and Emerging Technologies Unit (CETU) will investigate AI-driven fraud, hacking, and deceptive digital schemes.
- Laura D’Allaird, a seasoned SEC official, takes charge as the head of CETU to lead digital financial misconduct enforcement.
The Securities and Exchange Commission (SEC) has recently established the Cyber and Emerging Technologies Unit, CETU, to crack down on digital financial fraud. This new unit succeeds the Crypto Assets and Cyber Unit and is comprised of about 30 people drawn from different SEC offices.
According to reports, CETU will investigate a wide range of cyber-related misconduct, including fraud involving artificial intelligence and machine learning, deceptive schemes on social media and the dark web, and hacking attempts targeting financial data. It will also address issues such as illegitimate access to retail brokerages, cryptocurrency frauds, and corporations not compliant with cybersecurity standards. Public companies that fail to disclose information about cybersecurity risks could also be prosecuted under the new legal framework provided by CETU.
Leadership and Regulatory Restructuring
Laura D’Allaird has been appointed as the head of CETU, bringing extensive experience from her previous role as co-chief of the SEC’s now-disbanded Crypto Assets and Cyber Unit. D’Allaird served as counsel to SEC Commissioner Jaime Lizárraga and director of enforcement, preparing her for the challenges of leading the agency towards adequate digital finance supervision.
The SEC has been experiencing management changes since the start of the year. After the appointment of Mark Uyeda as the acting chairman earlier in the month, the agency has sought to reform its stance on cryptocurrencies. Disbanding the specialized crypto enforcement unit appears to be just one approach towards a comprehensive one whereby cryptocurrency-related investigations and cases will fall under the same jurisdiction as the Cybercrime Enforcement Tactical Unit or CETU.
The formation of CETU reflects the SEC’s increasing focus on preventing financial misconduct in digital markets. This will likely lead to increased regulation for fintech, cryptocurrency, and cybersecurity businesses. It has become essential for companies to adhere to such requirements from the SEC as the agency clamps down on fraudulent online operations.
In the dissemination of CETU, the SEC strengthens its investor-protection agenda and fights against fraudulent activities in the financial markets as it grapples with changes in competitive structures driven by technological advancement.
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