SEC significantly expands its crypto "enforcement" division, Cobie fires shots, U.S. Congressman: How much more taxpayer money will be wasted?

The SEC renamed its internet division established during the 2017 ICO boom, with staff numbers nearly doubling, and the expansion focused primarily on "enforcement" rather than "guidance," a decision that has drawn strong criticism from industry insiders. In response, SEC Commissioner Hester Peirce, who always advocates for the crypto space, expressed opposition, while prominent crypto influencer Cobie launched even more intense criticism.

Cryptocurrency and Cyber Unit

According to an announcement, the SEC has added 20 positions to what was formerly known as the Cyber Unit, now called the "Cryptocurrency and Cyber Unit," bringing the total to 50 positions, including investigators, litigators, trial advisors, and fraud analysts.

Since 2017, the unit has initiated over 80 enforcement actions against fraud, unregistered cryptocurrency products, and platforms, resulting in fines exceeding $2 billion.

With the expansion of the unit, the focus will be on whether the following activities violate securities laws:

• Issuance of cryptocurrencies
• Cryptocurrency exchanges
• Cryptocurrency lending, collateral products
• Decentralized finance (DeFi) platforms
• NFTs, stablecoins

SEC Chair Gary Gensler and Director Gurbir S. Grewal both emphasized the explosive growth of the cryptocurrency market and the vulnerability of retail investors in this space, highlighting the increasing importance of allocating more resources to protect investors.

Cobie: SEC Talks the Talk, But Doesn't Walk the Walk

Cobie directly responded to the SEC announcement on Twitter:

If "SEC protection" means reasonable consumer protection, enforcement actions against fraud, that's good; but if this is what SEC is doing now, it's useless. After five years of the unit's establishment, don't consider SEC a reliable regulatory body in the crypto space.

Cobie believes that a good regulatory framework would involve protective measures that enable investors to make informed decisions with clear and transparent information, such as:

1. Token projects must disclose clear and transparent private sale terms.
2. Token projects need to disclose clear and transparent token ownership unlocking schedule.
3. Token projects must disclose exact APY earnings.
4. Prevent "soft fraud" incidents: Some projects deliberately confuse and disguise themselves as legitimate crypto projects with various terms.

A reliable crypto regulatory body would contemplate the above standards rather than trying to stifle financial innovation. However, Cobie points out that the SEC's actions are completely contradictory to the press release, as they are attempting to attack/sue top companies while turning a blind eye to blatant Ponzi schemes that only benefit insider trading.

He believes that the SEC's governance is regressive, and the SEC is doubling down on policies that have been catastrophic failures over the past five years.

Meanwhile, wrongdoers are taking advantage of the lack of regulatory transparency, infiltrating legitimate crypto projects, ultimately putting retail investors in a worse position.

Crypto Mom Hester Peirce

SEC Commissioner Hester Peirce questioned this latest policy:

SEC is a regulatory body with an enforcement division, not an enforcement agency. Why are we leading in enforcement actions in the crypto space?

U.S. Congressman Tom Emmer criticized, expressing curiosity about how much taxpayer money is being wasted on Gary Gensler's personal vendetta against the crypto industry.