Posted May 03, 2022
By Ray Blanco
The Fight to Combat Digital Fraud
With the growing popularity of cryptocurrency, digital assets, and Non-fungible tokens (NFTs), there has also been an increase in digital fraud and other misconduct.
Crypto markets have exploded in recent years and retail investors have had to bear the brunt of cyber abuses in this space. Stolen crypto wallets, fraudulent NFT transfers, and more are all just pieces of the threat of cybersecurity concerns.
Even with the enhanced security of blockchain technology, digital fraud, and hacking attacks are still possible through clever tactics and social engineering.
And as the space continues to grow, the amount of fraud and hacks will grow too. Given this, the Securities and Exchange Commission is looking to boost the size of a special unit devoted to investigating cryptocurrency frauds and other misconduct.
This move follows the agency’s aggressive push to get the unregulated industry under control under federal supervision.
To do this, the SEC is planning to add 20 investigators and litigators to the Crypto Assets and Cyber Unit that it created in September 2017. With the addition of the new enforcers, the SEC’s special crypto unit would have 50 lawyers and other personnel.
The advent of this unit came about when regulators noticed a surge of new digital coins being sold to the public. The commission quickly positioned itself as the chief government entity combating fraud in the nearly $1.7 trillion market.
A market that has so far been able to sidestep most federal consumer- and investor-protection rules.
According to Cornerstone Research, From 2013 to 2022, the SEC filed nearly 100 cryptocurrency-related enforcement actions. Most of which targeted new sales of digital coins.
However, companies that operate major crypto trading venues—such as Coinbase Global Inc., FTX, and Binance—have resisted the SEC’s request to voluntarily adopt investor protection regulations. Hesitancy is mostly since registering as exchanges would come with a slew of new costs and compliance requirements, including creating rules for listing new assets that would need to be approved by the SEC.
We’ll likely see more back and forth as governments around the world look to regulate the wild west environment that is the crypto market.
To a bright future,
Chief Technology Expert, Technology Profits Daily