SEC Launches Task Force to Combat Rising Crypto and Securities Fraud

The Securities and Exchange Commission (SEC) has established the Interagency Securities Council (ISC) in collaboration with several federal, state, and local regulatory and law enforcement authorities. The council aims to address the increasing complexity of securities and crypto fraud by improving cooperation and information sharing among various institutions.

The ISC will meet every three months, with attendees from over 100 departments and agencies, including federal, state (including state attorneys general), state police, and municipal law enforcement. The primary objective is to identify emerging and existing patterns in scams and frauds and determine the most effective strategies for their prevention, as per Coingape.

Gurbir S. Grewal, who serves as the Chair of the ISC and also serves as the Director of the SEC's Division of Enforcement, emphasized the importance of this program in enabling investigators to remain informed about new threats to communities related to securities fraud. As stated in the report, Adam Anicich and Manuel Vazquez will lead the SEC's efforts on the ISC.

Cristina Martin Firvida, the Investor Advocate of the SEC, highlighted the significance of this synchronized effort in benefiting investors. It demonstrates the imperative for all tiers of government to collaborate and exchange information to bolster investor safeguarding.

The purpose of the ISC is to streamline communication and information sharing with law enforcement agencies that may not frequently encounter securities law infractions, such as local police departments and sheriff's offices.

The establishment of the ISC follows the SEC's investor advisory in May of this year, in which the SEC cautioned the public about the increasing instances of fraudsters exploiting bitcoin securities to defraud investors. These scams have developed as digital currencies have become more widely used, and scammers are employing new tactics to fool investors.

As per the SEC caution, scammers might contact potential victims via social media or direct communications, pretending to be individuals with investing advice or knowledge about the victim.

Likewise, these fraudsters frequently devote effort to establishing a connection with their targets before soliciting them to engage in fraudulent investment schemes, only to abscond with the funds.

These perpetrators have been observed utilizing advanced techniques, such as implementing Artificial Intelligence (AI). They establish counterfeit websites and employ deepfake technology to create authentic-sounding audio and video messages featuring celebrities or politicians endorsing fraudulent schemes. The SEC highlighted the increasing prevalence of pump-and-dump scams, particularly in low-quality or speculative currencies, such as memecoins, which sometimes result in significant financial losses for investors.

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