Member Article

The Securities and Exchange Commission (SEC) announced on May 3, 2022 the near doubling of the unit responsible for protecting investors in crypto markets and from cyber-related threats by allocating 20 additional positions to that team. The rebranded Crypto Assets and Cyber Unit (formerly known as the Cyber Unit) (CACU), which is part of the Division of Enforcement, will now number 50 full-time professionals.

“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. “The Division of Enforcement’s Crypto Assets and Cyber Unit has successfully brought dozens of cases against those seeking to take advantage of investors in crypto markets. 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.”

Originally formed in 2017, CACU has brought more than 80 enforcement actions related to crypto asset offerings and platforms, resulting in monetary relief totaling more than $2 billion. The expanded CACU is expected to focus on investigating securities law violations related to:

• Crypto asset offerings;
• Crypto asset exchanges;
• Crypto asset lending and staking products;
• Decentralized finance (“DeFi”) platforms;
• Non-fungible tokens (“NFTs”); and
• Stablecoins.

Additionally, CACU has previously brought actions against SEC registrants and public companies for failing to maintain adequate cybersecurity controls and for failing to appropriately disclose cyber-related risks and incidents. It is expected that activity in this area will continue to expand.

Dinsmore attorneys are closely monitoring these developments.