The SEC has drawn criticism for doubling down on its crypto enforcement arm to 50 new positions.
On Tuesday, the SEC announced the allocation of 20 additional positions to the unit in chrage of protecting investors in crypto markets – Cypto Assets and Cyber Unit in the Division of Enforcement.
“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,” said SEC Chair Gary Gensler.
“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.”
Since its creation in 2017, the unit has reported 80 enforecement actions, relieving more than US$ 2 billion to crypto crime victims. Its scope includes protection in relation to crypto assets, crypto asset echanges, crypto asset lending and staking, DeFi, NFTs and stablecoins.
However, the SEC’s announcement has been met with disapproval from many investors on social media.
“Today we announced that we’re bolstering the unit responsible for protecting investors in crypto markets & from cyber-related threats,” the SEC tweeted on Tuesday with a link to their press release.
A top comment, which even came from SEC Commissioner Hester Pierece, questioned why the SEC is involved in enforcement when its role is in regulation.
“The SEC is a regulatory agency with an enforcement division, not an enforcement agency. Why are we leading with enforcement in crypto?” Pierece asked.
Others questioned the success of the SEC in regulating traditional markets. “Meanwhile, market makers and hedge funds steal millions a day from retail investors through PFOF and dark pool manipulation!” One Twitter user wrote. “Seriously, how can someone legally buy my order flow and then route it through a dark exchange, while front running their own order?”
“Investors get more protection from a condom with a hole in it than they do from the SEC,” another cynical tweeter wrote.
Although social media often tends to be a place of unwarranted hate, critics of the SEC’s tightened crypto security move have valid grievances. The ongoing debate surrounding leaving the crypto markets as the wild west continues as crypto’s decentralised (and unregulated) nature is where its value lies. Consumers and investors should appreciate protection from bad actors, but the SEC which has a notorious reputation of overstepping its boundaries has left many investors sceptical about their foray into crypto.
The crypto world might still need some level of regulation to prevent a Lord of the Flies situation, but perhaps the SEC just isn’t the right conch.