On February 20, 2025, the Securities and Exchange Commission (SEC) announced the creation of a new specialized unit, the Cyber and Emerging Technologies Unit, to "focus on combatting cyber-related misconduct and to protect retail investors from bad actors in the emerging technologies space."1 According to the release, the Cyber and Emerging Technologies Unit will "replace" the SEC's Crypto Assets and Cyber Unit, which was rebranded to focus on crypto under former SEC Chair Gary Gensler.2
In connection with the recent creation of the Crypto Task Force, the SEC indicated its intention to move away from the enforcement-first approach with respect to crypto and instead focus on providing a regulatory framework for the industry.3 Consequently, the fact that the Division of Enforcement's new unit is focused on fraud and protecting retail investors is not surprising.
I. PRIORITIES OF THE CYBER AND EMERGING TECHNOLOGIES UNIT
The announcement of the formation of a new specialized unit within the Division of Enforcement provides an initial indication of the enforcement priorities under the second Trump Administration.
According to the announcement, the Cyber and Emerging Technologies Unit will focus on fraud-related actions and harm to retail investors, including:
- Fraud committed using emerging technologies, such as artificial intelligence and machine learning
- Use of social media, the dark web or false websites to perpetrate fraud
- Hacking to obtain material nonpublic information
- Takeovers of retail brokerage accounts
- Fraud involving blockchain technology and crypto assets
- Regulated entities' compliance with cybersecurity rules and regulations
- Public issuer fraudulent disclosure relating to cybersecurity
These priorities signal that the focus of this new unit may align with that of the original Cyber Unit, which was created under Chair Jay Clayton in September 2017 during the first Trump Administration. In this regard, the announcement of the new Cyber and Emerging Technologies Unit bears a strong resemblance to the announcement of that original Cyber Unit.4 According to the September 2017 announcement, the original Cyber Unit's focus would be:
- Market manipulation schemes involving false information spread through electronic and social media
- Hacking to obtain material nonpublic information
- Violations involving distributed ledger technology and initial coin offerings
- Misconduct perpetrated using the dark web
- Intrusions into retail brokerage accounts
- Cyber-related threats to trading platforms and other critical market infrastructure
The similarity of these priorities indicates that, like the original Clayton-era Cyber Unit, the mandate of the Cyber and Emerging Technologies Unit will be different from the Gensler-era Crypto Assets and Cyber Unit's narrower focus on "polic[ing] wrongdoing in the crypto markets" and "identify[ing] disclosure and controls issues with respect to cybersecurity."5
We anticipate that the Cyber and Emerging Technologies Unit will focus on all types of technology-related fraud, such as material misrepresentations made by issuers and registrants about artificial intelligence and machine learning risks and capabilities, an area that has proliferated since the prior Cyber Unit was formed. With respect to cybersecurity incidents, we anticipate that the new unit will focus on statements made by public companies that are clearly false or misleading or reflect clear omissions, rather than on policing the precise wording of a company's cyber-related disclosures, which Acting Chair Mark Uyeda and Commissioner Hester Peirce have both criticized.6 We further anticipate that the new unit will focus on investment fraud schemes perpetuated online, such as impersonation schemes and market manipulation schemes conducted on social media, as well as attempts to compromise retail brokerage accounts to misappropriate assets or otherwise engage in misconduct.7
II. WHAT THIS MEANS FOR THE CRYPTO INDUSTRY
With respect to crypto, the SEC has been clear that it will no longer be focused on bringing non-fraud enforcement actions against crypto companies. Instead, we expect the new unit, and the Division of Enforcement as a whole, to return to bread-and-butter fraud-related investigations, with a focus on conduct that impacts retail investors, as was the focus during the first Trump Administration. As Acting Chair Uyeda recently stated: "An important objective of any financial regulator in protecting investors is to ferret out bad actors and foster the provision of information necessary to make informed investment decisions. Capital formation—a core SEC mission and one that is vital to our economy—cannot flourish in an environment rife with fraud and deceit."8 Similarly, in a recent statement regarding the new Crypto Task Force, Commissioner Peirce stated that as the Task Force works on crypto-related issues, "the Commission's efforts continue unabated to combat fraud involving securities, including crypto assets that are securities or that were offered and sold as part of an investment contract, and tokenized securities."9
III. LOOKING FORWARD
Replacing the Crypto Assets and Cyber Unit with the Cyber and Emerging Technologies Unit will enable the Division of Enforcement to leverage the substantial experience and expertise it has developed in the detection and pursuit of fraudulent conduct in an increasingly technological and data-driven landscape. The formation of the new Cyber and Emerging Technologies Unit is an early indication that industry participants should expect an active Division of Enforcement under the second Trump Administration with a focus on fraud- and retail-focused issues.
Footnotes
1 Press Release, "SEC Announces Cyber and Emerging Technologies Unit to Protect Retail Investors" (Feb. 20, 2025), available at https://www.sec.gov/newsroom/press-releases/2025-42.
2 Id.
3 See Press Release, "SEC Crypto 2.0: Acting Chairman Uyeda Announces Formation of New Crypto Task Force" (Jan. 21, 2025) ("To date, the SEC has relied primarily on enforcement actions to regulate crypto retroactively and reactively, often adopting novel and untested legal interpretations along the way."), available at https://www.sec.gov/newsroom/press-releases/2025-30.
4 Press Release, "SEC Announces Enforcement Initiatives to Combat Cyber-Based Threats and Protect Retail Investors" (Sept. 25, 2017), available at https://www.sec.gov/newsroom/press-releases/2017-176.
5 Press Release, "SEC Nearly Doubles Size of Enforcement's Crypto Assets and Cyber Unit" (May 3, 2022), available at https://www.sec.gov/newsroom/press-releases/2022-78.
6 Comm'r Hester M. Peirce, Comm'r Mark T. Uyeda, Statement Regarding Administrative Proceedings Against SolarWinds Customers (Oct. 22, 2024), available at https://www.sec.gov/newsroom/speeches-statements/peirce-uyeda-statement-solarwinds-102224.
7 See Office of Investor Education and Advocacy, Social Media and Investment Fraud – Investor Alert (Aug. 29, 2022), available at https://www.investor.gov/introduction-investing/general-resources/news-alerts/alerts-bulletins/investor-alerts/social-media-and-investment-fraud-investor-alert.
8 Acting Chairman Mark T. Uyeda, Introductory Remarks at the 2nd Annual Judge Stanley Sporkin SEC Division of Enforcement Directors Panel (Feb. 20, 2025), available at https://www.sec.gov/newsroom/speeches-statements/uyeda-remarks-enforcement-directors-panel-022025.
9 Comm'r Hester M. Peirce, Statement: There Must Be Some Way Out of Here (Feb. 21, 2025), available at https://www.sec.gov/newsroom/speeches-statements/peirce-statement-rfi-022125.
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