As the acceeptance and use of cryptocurrency has taken a quantum leap, so has cryptocurrency fraud. Per a report from CNBC, crypto crimes were up 79% in 2021 vs 2020 and a record 14 billion was stolen in cryptocurrency.
If an effort to deal with the onslaught, the SEC instituted Cybersecurity audits. Financial institutions, broker dealers and investment advisors will need to be prepared to answer these topics:
- Identification of cybersecurity risks, how they are assessed & steps to handle.
- Steps taken to protect identities.
- What are the cyber security measures.
- Detection of unauthorized activity.
- Network and information protection
- Risks associated with remote clients and fund transfers.
Complete information can be found here: https://www.sec.gov/spotlight/cybersecurity
SEC Workforce Expansion
In addition to that, the U.S. Securities and Exchange Commission (SEC) is hiring 20 more employees for the newly renamed Crypto Assets and Cyber Unit, formerly known as the Cyber Unit.
On Tuesday, SEC chair Gary Gensler said in an official announcement that the new hires will help protect investor interest in the emerging crypto markets.
“The US has the greatest capital markets because investors have faith in them, and as more investors access the crypto markets, it is increasingly important to dedicate more resources to protecting them.
The Division of Enforcement’s Crypto Assets and Cyber Unit has successfully brought dozens of cases against those seeking to take advantage of investors in crypto markets. By nearly doubling the size of this key unit, the SEC will be better equipped to police wrongdoing in the crypto markets while continuing to identify disclosure and controls issues with respect to cybersecurity.”
Function of New Unit
According to the announcement, the new and improved Crypto Assets and Cyber Unit will protect crypto investors, focusing on securities law violations related to crypto asset offerings, crypto asset exchanges, crypto asset lending and staking protocols, decentralized finance (DeFi) platforms, non-fungible tokens (NFTs) and stablecoins.
Says SEC Division of Enforcement Director Gurbir S. Grewal of the new, enhanced unit,
“Crypto markets have exploded in recent years, with retail investors bearing the brunt of abuses in this space. Meanwhile, cyber-related threats continue to pose existential risks to our financial markets and participants.
The bolstered Crypto Assets and Cyber Unit will be at the forefront of protecting investors and ensuring fair and orderly markets in the face of these critical challenges.”
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