On May 3, 2022 the Securities and Exchange Commission (the “SEC”) announced the addition of 20 new positions to the Division of Enforcement’s newly renamed Crypto Assets and Cyber Unit (formerly known as the Cyber Unit), expanding the Crypto Assets and Cyber Unit to 50 positions (the “Announcement”).[i] With its expanded numbers, the Crypto Assets and Cyber Unit will continue to identify cybersecurity disclosure and control issues and will focus on investigating:
· Crypto asset offerings;
· Crypto asset exchanges;
· Crypto asset lending and staking products;
· Decentralized finance (“DeFi”) platforms;
· Non-fungible tokens (“NFTs”); and
· Stablecoins.[ii]
This Announcement is the latest in a string of SEC initiatives aimed at policing the use of crypto assets and bolstering market participants’ cybersecurity measures. In 2022 alone, the SEC has proposed rules on cybersecurity preparation and disclosure (the “Proposal”),[iii] highlighted cybersecurity and crypto-assets in the Division of Examination’s Examination Priorities (the “Examination Priorities”),[iv] and issued at least four press releases in 2022 touting crypto-related…
