SEC establishes 'Internet and Emerging Technologies Division' to enhance crackdown on AI fraud, Blockchain crimes

The U.S. Securities and Exchange Commission (SEC) officially announced the establishment of the Cyber and Emerging Technologies Unit (CETU) on February 20, 2025, to combat cybersecurity-related breaches and protect retail investors from bad practices in the emerging technology space. The division, led by Laura D'Allaird, replaces the original Crypto Assets and Cyber Unit and consists of about 30 financial fraud experts and lawyers from various SEC offices.

SEC Acting Chair Mark T. Uyeda said, 'Under Laura's leadership, this new division will collaborate with the encryption Asset Special Working Group (Crypto Task Force) to ensure the proper allocation of law enforcement resources. Our goal is not only to protect investors but also to promote capital formation by eliminating illegal activities, maintaining market efficiency, and enabling innovation to develop healthily.'

CETU's main areas of focus: AI fraud, social media scams, blockchain crimes, etc.

CETU's team of experts will leverage their extensive experience in the field of finTech and cybersecurity, focusing on the following categories of breaches involving securities trading:

1. Financial fraud using emerging technologies (AI, machine learning).

With the development of artificial intelligence (AI) and machine learning (ML), scams have become more sophisticated. CETU closely monitors how criminals abuse these technologies to manipulate markets or deceive investors.

2. Social Media, Dark Web, and Fake Website Frauds

Criminals often mislead investors through social media, the dark web, or fake investment websites, and even spread false information to influence the market. SEC hopes to curb such online fraud through CETU.

3. Stealing undisclosed information through hacking attacks

Hackers attack financial institutions, enterprises, or individual accounts to steal internal trading information or undisclosed financial data for illegal transactions. CETU will focus on such cybercrimes to ensure market fairness.

4. Hacking into retail brokerage accounts to steal investors' assets

Hackers infiltrating the securities trading accounts of retail investors to conduct unauthorized trades or fund transfers has become one of the common financial crimes in recent years. CETU will strengthen supervision to prevent such criminal activities from causing losses to retail investors.

5. Monitor blockchain and encryption asset scams

The currency and blockchain technology, while bringing financial innovation, has also become a hotbed for fraudsters. CETU will focus on supervising fraudulent activities in the encryption asset field, such as false ICOs (Initial Coin Offerings), and encryption asset Ponzi schemes.

6. Whether the financial institution complies with cybersecurity regulations

The SEC has emphasized in recent years that financial institutions must comply with cybersecurity regulations to protect investor data. CETU will monitor the implementation of cybersecurity regulations by regulated bodies and crack down on businesses that fail to comply.

7. Transparency of information disclosure on cybersecurity risks of listed companies

The cybersecurity situation of enterprises directly affects investor confidence, so the SEC will also pay attention to whether listed companies are honest and transparent in disclosing cybersecurity risks to prevent companies from concealing security vulnerabilities or hacker attacks.

SEC strengthens regulation to protect innovation and investment security

By establishing CETU, the SEC hopes not only to combat malicious behavior in the market, but also to provide a safer and fairer investment environment for the development of emerging technologies. With the rapid development of AI, blockchain and digital finance, the SEC will continue to strengthen supervision to ensure that innovation can grow within a framework of compliance and security, and that retail investors do not fall victim to new technology scams.

This article SEC establishes the 'Internet and Emerging Technologies Division' to strengthen the fight against AI fraud and blockchain crimes first appeared in ChainNews ABMedia.