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Shifting Crypto and Cyber Priorities In SEC Enforcement
At the end of each fiscal year, the U.S. Securities and Exchange Commission (SEC) issues its annual enforcement report. Within the report the SEC publishes its enforcement statistics for the year, categorizing each individual enforcement action the agency brings. The past several years, under Chair Gary Gensler’s leadership, saw a significant dedication of resources to investigating and charging participants in the cryptocurrency or digital assets space and the cybersecurity space. Within the annual enforcement report, there are no specific “crypto” or “cyber” categories, but these actions have taken up an outsized representation in the securities offering, broker-dealer, securities exchange, and public issuer reporting statistics. When the SEC issues the next annual enforcement report for fiscal year 2025, we expect a very different set of statistics. Securities offering actions (often corresponding to investment frauds such as Ponzi and pyramid schemes) and investment adviser actions (often corresponding to harms to retail advisory clients) will almost certainly be up, and the “crypto” and “cyber” cases — no matter what category they fit into — will almost certainly be down. Public statements by the new SEC administration under Acting Chair Mark Uyeda have said as much, but even more telling than public statements are the allocation of limited enforcement resources.
Cryptocurrency
On Feb. 20, SEC announced that it created a Cyber and Emerging Technologies Unit (CETU) to combat cyber-focused financial misconduct. See, “SEC Announces Cyber and Emerging Technologies Unit to Protect Retail Investors,” SEC.Gov (Feb. 20, 2025).
The announcement reflects a (re)rebranding of the unit and a tangible shift in the SEC’s overall regulatory and enforcement priorities. The Cyber Unit, originally established by the SEC in 2017, was renamed in May 2022 under Chair Gensler as the Crypto Assets and Cyber Unit and expanded to include 50 positions. See, “SEC Announces Enforcement Initiatives to Combat Cyber-Based Threats and Protect Retail Investors,” SEC.Gov (Sept. 25, 2017); “SEC Nearly Doubles Size of Enforcement’s Crypto Assets and Cyber Unit,” SEC.Gov (May 3, 2022).
In its most recent redesign, the SEC did not disband the Unit altogether, and it is notable that Laura D’Allaird — a former counsel to a Democratic Commissioner who had been named co-head of the Crypto Assets and Cyber Unit in December 2024 — will remain as the head of the CETU. See, Aislinn Keely, “SEC Taps New Co-Leaders For Crypto Enforcement Unit,” Law360.com (Dec. 4, 2024). Instead, as emphasized in the SEC’s press release, the CETU now will focus on fraud and other clearcut instances of cyber-related misconduct, particularly fraud that impacts retail investors. These “new” priorities greatly parallel those announced by the SEC with the initial iteration of the Cyber Unit under then Chairman Jay Clayton in 2017. See, “SEC Announces Enforcement Initiatives to Combat Cyber-Based Threats and Protect Retail Investors,” SEC.Gov (Sep. 25, 2017). The CETU will work alongside the Commission’s newly formed Crypto Task Force launched by Acting Chair Uyeda and led by Commissioner Hester Peirce. See, “SEC Crypto 2.0: Acting Chairman Uyeda Announces Formation of New Crypto Task Force,” SEC.Gov (Jan. 21, 2025).
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