Fighting Cryptocurrency Fraud
US financial regulator SEC doubles staff and targets fraud in decentralized finance, NFTs and stablecoins.
The U.S. Financial Industry Regulatory Authority (SEC) aims to curb fraudulent activity in the booming cryptocurrency market. The Securities and Exchange Commission said it would rename its division the Crypto Assets and Cyber Unit. The unit will focus on preventing fraud that takes advantage of crypto-asset offerings, crypto-asset exchanges, crypto-asset lending and staking products, decentralised financial platforms, non-fungible tokens (NFTs) and stablecoins, it said. Crypto trading often circumvents strict regulatory controls by operating in offshore countries or in regulatory gray areas.
Meanwhile, the general public’s interest in the crypto market has skyrocketed, as evidenced by a surge in private equity investment in this sector, known as web3. In March, for example, startup Yuga Labs raised about $450 million in a funding round led by Andreessen Horowitz to build Otherside. The decentralized metaverse builds on NFT offerings such as Bored Ape Yacht Club.
According to Pitchbook, venture capital for crypto projects such as blockchain-based apps and cryptocurrency platforms totaled $10 billion globally in the first quarter of this year, more than double the amount raised a year ago. Total annual investment increased from $3.7 billion in 2019 to $5.5 billion in 2020, then took a giant leap to $28 billion in 2021.
