SEC’s New Cyber Unit Tasked with Blockchain Securities Fraud
The wild west of blockchain may come to a close. The SEC has recently created a Cyber Unit focused on investigating digital misconduct and fraud to protect retail investors.
In a press release, the SEC announced that it would create a unit to combat “cyber-based threats and protect retail investors.” The Cyber Unit is tasked with the SEC’s Enforcement Division’s cyber-related misconduct:
- Market manipulation using false information spread through social media.
- Hacking to obtain nonpublic information.
- Misconduct perpetrated using the dark web.
- Intrusions into retail brokerage accounts.
- Cyber threats related to trading platforms and critical market infrastructure.
And most importantly, violations involving distributed ledger technology and initial coin offerings (ICOs).
According to Stephanie Avakian, Co-Director of the SEC’s Enforcement Division:
“Cyber-related threats and misconduct are among the greatest risks facing investors and the securities industry. The Cyber Unit will enhance our ability to detect and investigate cyber threats through increasing expertise in an area of critical national importance.”
The SEC Enforcement Division is serious when it comes to protecting retail investors. The Enforcement Division brings cases of everything from the sale of unsuitable products to microcap pump-and-dump schemes.
Those who participate in insider trading, coin pump-and-dump schemes, and sale of unregistered securities should rightfully worry.
The Cyber Unit will apply techniques leveraging data analytics and technology to identify large-scale misconduct and leverage personnel from around the country.
Steven Peikin, Co-Director of the SEC’s Enforcement Division.
“By dedicating additional resources and expertise to developing strategies to address misconduct that victimizes retail investors, the division will better protect our most vulnerable market participants.”
In addition to the Cyber Unit, the SEC created the Distributed Ledger Technology Working Group.
The group “focuses on studying emerging applications of the distributed ledger technology in the financial industry.”
It looks like the sheriff is coming to town.
Cover Damian Zech on Flickr
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