SEC Officials Instructed to Shrink Cryptocurrency Enforcement Team: Report

The U.S. Securities and Exchange Commission (SEC) is reportedly downsizing a special unit of more than 50 lawyers and staff members tasked to bring crypto enforcement actions.

Citing five people familiar with the matter, The New York Times reports that a leading lawyer in the unit was pulled out from the enforcement division and some were assigned to other departments within the agency.

The crypto enforcement unit was created during the first Trump administration but it nearly doubled its size in 2022 under previous SEC chair Gary Gensler, who initiated a crackdown on the US crypto industry.

A recent tally reveals that the unit brought more than 100 crypto-related actions during the Biden administration.

It is not yet clear though if the shake-up will affect pending enforcement actions, which include a case involving Coinbase. The crypto exchange is charged with violating federal securities laws by operating an unregistered platform.

The report says some people think that the reorganization constitutes unfair demotion. Corey Frayer, who served as senior adviser to Gensler on crypto issues, also criticizes the SEC’s friendlier stance on digital assets.

“What the new SEC leadership proposes to do for crypto is remove the speed limits and guardrails that have made our capital markets the strongest in the world.”

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