SEC nearly doubles crypto enforcement unit, citing fraud risk in booming market

The US Securities and Exchange Commission (SEC) announced Tuesday that it will close to double its cryptocurrencies enforcement division, adding another 20 positions.

The SEC stated in a press release that it has a responsibility to keep investors safe from fraudulent investment schemes during a booming period for cryptocurrencies.

Retail investors are bearing the brunt of abuses in the space. The SEC's Division of Enforcement said that cyber threats pose a threat to our financial markets and participants.

Fraud and abuse have remained the same as the availability of cryptocurrencies has increased. A rug pull is a type of scam where the operators of a project solicit investment, promise big returns, and then simply flee with the money.

In its announcement, the SEC expressed particular interest in crimes related to the staking and lending platforms, Defi services, stable coins, and NFTs. The SEC said that it had created staff positions for investigative attorneys, trial counsels, and fraud analysts.

The SEC chair said that the division of enforcement brought dozens of cases against people who were trying to take advantage of investors.

Since taking up the position of SEC chair, Gensler has highlighted the need for more power and resources in regulating cryptocurrencies. He called on Congress to expand the agency's authority to regulate trading and lending platforms. The SEC brought its first-ever charges against a DeFi platform, accusing the operators of the Cayman Islands-based Blockchain Credit Partners of unregistered sales of more than $30 million in securities.

It is unclear whether the expansion of the team will be enough to meet the full range of the agency's ambitions in the field. Gensler highlighted the huge number of newly launched products and services that could fall under the SEC's remit, citing 6,000 new projects in need of evaluation to determine whether they qualify as securities under US law.