Regulation

SEC launches new unit to police ICOs and blockchain violations

SEC - cyber unit
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The US Securities and Exchange Commission (SEC) has announced a new Cyber Unit that will target violations that involve the use of distributed ledger technology of ICOs.

The new units main focus, however, is to police ‘cyber-based threats and protect retail investors’. In trying to achieve this goal, the unit will have to contend with a number of different areas aside from misuse of ICOs and blockchain technology, including:

  • market manipulation schemes involving false information distributed through social media and other electronic media
  • the use of hacking to obtain non-public material information
  • ‘misconduct perpetrated using the dark web’
  • intrusions into retail brokerage accounts
  • cyber-related threats to trading platforms and other market infrastructure

“Cyber-related threats and misconduct are among the greatest risks facing investors and the securities industry,” said Stephanie Avakian, Co-Director of the SEC’s Enforcement Division.

“The Cyber Unit will enhance our ability to detect and investigate cyber threats through increasing expertise in an area of critical national importance.”

The announcement comes hot on the heels of the SEC disclosure that it had suffered a hack to its own database of corporate filings.

The SEC has previously stated that US securities law may apply to ICOs. The warning has not dampened investor enthusiasm for the practice, with CoinDesk’s ICO Tracker listing over $600 million since that July investor bulletin was issued.

“Protecting the welfare of the Main Street investor has long been a priority for the Commission,” said Steven Peikin, Co-Director of the SEC’s Enforcement Division.

“By dedicating additional resources and expertise to developing strategies to address misconduct that victimizes retail investors, the division will better protect our most vulnerable market participants.”

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