SEC Announces Unit to Protect Investors From Crypto, AI Scams

The Securities and Exchange Commission announced Thursday the establishment of the Cyber and Emerging Technologies Unit, which will seek “to protect retail investors from cryptocurrency scams and other bad actors in the emerging technologies space.”

The unit will be led by Laura D’Allaird, who was co-chief of the Crypto Assets and Cyber Unit, which is being replaced by the CETU, comprised of 30 fraud specialists and attorneys across multiple SEC offices.

“The unit will not only protect investors but will also facilitate capital formation and market efficiency by clearing the way for innovation to grow. It will root out those seeking to misuse innovation to harm investors and diminish confidence in new technologies,” said Commissioner Mark Uyeda, acting chairman of the SEC, in a statement.

According to the SEC, the CETU will investigate fraud using emerging technologies such as artificial intelligence and machine learning. Its focus areas include fraud involving blockchain technology and cryptocurrency assets; the use of social media and false website to perpetrate fraud; hacking to obtain material nonpublic information; and public issuer fraudulent disclosure related to cybersecurity.

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According to Chainalysis, a cryptocurrency research firm, in 2024, an estimated $40.9 billion in crypto assets were received by illicit addresses or crypto accounts tied to scammers, illicit actors and other entities. This figure was $11 billion in 2020 and reached a high of $54.3 billion in 2022.

Technology services firm ACA Global earlier this month warned in a report that hackers are increasingly using artificial intelligence to impersonate executives and other employees at financial services firms in order to get sensitive company information, payments and banking information from clients.