SEC launches new unit focused on protecting investors against fraud in crypto and AI

The U.S. Securities and Exchange Commission is creating a new unit within its agency aimed at protecting investors from bad actors in crypto and artificial intelligence. 

The agency announced the new unit on Thursday, calling it the Cyber and Emerging Technologies Unit, or CETU, according to a statement. CETU will replace the Crypto Assets and Cyber Unit, which was created in 2022 under the former Biden administration.

CETU will be led by Laura D'Allaird, who has been at the SEC for several years in various roles in enforcement. Previously, D'Allaird was the co-chief of the Crypto Assets and Cyber Unit and was also counsel to former Democratic Commissioner Jaime Lizárraga, according to her LinkedIn.

"The unit will not only protect investors but will also facilitate capital formation and market efficiency by clearing the way for innovation to grow," said SEC Acting Chair Mark Uyeda in a statement.  "It will root out those seeking to misuse innovation to harm investors and diminish confidence in new technologies.”

CETU will also coincide with work done by Republican Commissioner Hester Peirce within the newly created Crypto Task Force, Uyeda added. Peirce recently outlined her priorities for that task force, including classifying some tokens as "non-securities."

According to the statement, CETU will look into fraud using AI and machine learning, as well as fraud involving blockchain technology and crypto. 

Since the new Trump administration has rolled in, the SEC has begun a regulatory shift that takes a different approach than under former Chair Gary Gensler. Gensler had been weary of crypto and had said many cryptocurrencies are securities. When creating Peirce's task force, the agency said it wanted to set the SEC on a "sensible regulatory path that respects the bounds of the law."