SEC: Cyber-Related Threats and Misconduct Are Among the Greatest Risks Facing Investors and the Securities Industry

U.S. regulators are continuing to investigate legal violations that are involved with initial coin offerings (ICO). At present, the ICO market has so far raised $2.3 billion in blockchain-based funding with a great majority of tokens stemming from the Ethereum network. Prior statements made in the past show the regulatory agency is seeking to prevent ICOs because they violate financial regulations and securities mandates. The SEC Cyber Unit will investigate market manipulation schemes conducted with distributed ledger technology and regulatory violations tied to ICOs. Further the unit will probe misconduct perpetrated using the dark web and other “cyber-related threats.”

According to the latest SEC announcement, the unit was created months ago to implement “risk monitoring” initiatives previously outlined by the Chairman Jay Clayton.

“Cyber-related threats and misconduct are among the greatest risks facing investors and the securities industry,” explains the Co-Director of the SEC’s Enforcement Division, Stephanie Avakian. “The Cyber Unit will enhance our ability to detect and investigate cyber threats through increasing expertise in an area of critical national importance.”

Regulators Create a Retail Strategy Task Force to Protect the Most Vulnerable Market Participants

The Cyber Unit will also include a “Retail Strategy Task Force” explains the SEC’s enforcement division announcement. Task force members have a long history of investigating retail investor fraud and will include personnel from the SEC’s National Exam Program and the Office of Investor Education and Advocacy. “By dedicating additional resources and expertise to develop strategies addressing misconduct that victimizes retail investors, the division will better protect our most vulnerable market participants,” said Steven Peikin, Co-Director of the SEC’s Enforcement Division.

SEC Chairman Fully Endorses the Efforts to Pursue New Forms of Misconduct

The SEC Chairman Jay Clayton says he approves of the task force initiative created by the agency’s enforcement division founders Steven Peikin, and Stephanie Avakian. Clayton has already made previous statements in the past regarding the ICO environment and said token sale investors are not adequately informed of the market risks. “I am not comfortable that the American investing public understands the substantial risks,” explained Clayton earlier this month.  

“When Stephanie and Steve approached me with these initiatives, I endorsed them wholeheartedly. They reflect the division’s continual efforts to pursue new forms of misconduct while keeping a watchful eye out for our Main Street investors,” said SEC Chairman’s endorsement.



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