Looks like the SEC’s brand-new cryptocurrency task force was formed not a moment too soon.
Crypto exchange Bybit suffered the biggest crypto hack in history last Friday when $1.5 billion was stolen during a routine internal transfer of funds. Hackers intercepted the transfer and funneled the money to an unknown address, and are no doubt living it up right about now.
Although ByBit CEO Ben Zhou posted on X Sunday assuring users that these losses would be covered and the company remained solvent, more than a few freaked out, and a $4 billion bank run ensued.
While a heist of this magnitude is a gut-punch to an industry hoping for more legitimacy, we can’t say we were all that surprised—crypto hacks are about as common as stick-em-ups were in the Wild West. Crypto thieves have swiped over $19 billion during the last 15 years or so, according to Crystal Intelligence. The last big burglary occurred in March 2022, when $600 million was stolen from Ronin Network, very little of which was ever retrieved.
‘Law & Order,’ crypto edition
Clearly, the SEC’s new task force has its work cut out for it. Commissioner Hester Peirce released a statement on Friday saying, “Five years ago, I remarked that ‘figuring out how to deal with the SEC on crypto issues [was] like a regulatory version of an escape room.’ Now it is time to help open the door.”
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Although Peirce’s task force aims to draw up some regulatory guidelines, as far as Trump-appointed task forces go, this one has set a remarkably crypto-friendly tone—particularly compared to past presidential regimes. Under the Biden administration, the SEC filed lawsuits against both Coinbase and Robinhood, which were both recently dropped. Peirce’s warm embrace of the industry has even earned her the affectionate nickname “crypto mom.”
As for the impact this task force and the recent hack may have on the crypto market, that remains to be seen. But experts are cautiously optimistic.
“I think the Bybit hack and SEC cryptocurrency task force could add increased regulatory scrutiny, which could lead to stricter compliance requirements similar to traditional financial institutions,” says Custom Fit Financial certified financial planner Chad Gammon. “Short-term, it may negatively impact the crypto market, but long-term, it could help to bring in institutional investors which would have a positive impact as it would increase security and transparency. The biggest risk would be over regulation, which could push innovation overseas.”—JD