The Securities and Exchange Commission (SEC) recently announced the formation of the Cyber and Emerging Technologies Unit (CETU). This new unit, which officially launched on February 20, 2025, is comprised of 30 fraud specialists and attorneys and replaces the former Crypto Assets and Cyber Unit.
The CETU is designed to operate in conjunction with the existing Crypto Task Force spearheaded by Commissioner Hester Peirce. The primary goal of the CETU is to safeguard innovation and boost confidence in the digital assets sector by actively targeting and disrupting the activities of fraudulent actors.
The SEC’s announcement highlights several key areas where the CETU will concentrate its efforts. These priority areas include, but are not limited to:
- Fraud involving emerging technologies such as artificial intelligence and machine learning.
- Misuse of social media, the dark web, or deceptive websites to perpetrate fraud.
- Unauthorized access to obtain material nonpublic information.
- Takeovers of retail brokerage accounts.
- Fraud related to blockchain technology and crypto assets.
- Ensuring regulated entities adhere to cybersecurity rules and regulations.
- Addressing fraudulent disclosures by public issuers concerning cybersecurity.
Impact on SEC Enforcement and the Crypto Landscape
From an initial analysis, the SEC’s press release appears to be a strategic public relations statement, indicating a focus on enforcement rather than broad-based regulatory expansion. For years, both the markets and legal professionals have been calling for clear regulatory guidelines. The reorganization of the enforcement staff signals the SEC’s commitment to evolving with developments in fraud within emerging technologies.
This approach is considered sensible, especially considering that new legislation and regulations often precipitate an uptick in fraudulent schemes. Bad actors frequently look for opportunities to exploit individuals and enterprises. Crypto entrepreneurs and those expanding their presence in the U.S. crypto and blockchain space should take note: the stated enforcement priorities clearly suggest that certain blockchain and crypto activities will continue to fall under the definition of securities. Therefore, these activities are subject to SEC jurisdiction when fraud is involved.
Notably, the press release neither defines nor alludes to what might be determined as a security. This definition is expected to remain the purview of Congress. The ongoing efforts in Congress to revise the Financial Innovation and Technology for the 21st Century Act (FIT21), along with related NFT Act and stablecoin legislation, are extremely important.
The specifics of how and when digital assets are excluded from the current definition of a security will drastically influence the regulatory environment. It will also determine how favorable the new system is to blockchain innovation.
Lastly, it is crucial to remember that the Department of Justice (DOJ) maintains broad jurisdiction and authority. The DOJ can prosecute wire fraud crimes, which, in most instances, cover digital asset transactions. Currently, Attorney General Pam Bondi’s office has not announced any policy changes suggesting that criminal prosecutions will cease.
