SEC Forms International Task Force to Crack Down on Pump-and-Dump Schemes

The U.S. Securities and Exchange Commission has launched a task force designed to tackle cross-border financial fraud.  This is particularly focused on pump-and-dump schemes in the crypto markets. 

SEC Launches the Cross-Border Task Force

In a recent X post, SEC Chairman Paul S. Atkins shared the news of the creation of the Cross-Border Task Force. This body will consolidate investigative resources and deploy the agency’s full legal arsenal against transnational fraud. 

The task force’s early mandate will be to investigate market manipulation tied to foreign-based companies. This is primarily intended for those operating in jurisdictions such as China, where investor protections can be more challenging to enforce.

Commenting on the launch of the new task force, SEC Chairman Paul S. Atkins emphasized the regulator’s commitment to safeguarding investors.

“We welcome companies from around the world seeking access to the U.S. capital markets,” said SEC Chairman Paul S. Atkins. “But we will not tolerate bad actors – whether companies, intermediaries, gatekeepers or exploitative traders – that attempt to use international borders to frustrate and avoid U.S. investor protections”

The task force also shared in the press release that it will scrutinize auditors, underwriters, and other market gatekeepers who facilitate access to U.S. capital markets. 

Margaret A. Ryan, Director of the Division of Enforcement, underscored that the task force will leverage the division’s expertise to address international manipulation. 

“This initiative strengthens our ability to enforce securities laws and protect American investors from schemes designed to exploit global financial systems,” she said.

The formation of the task force also aligns with the SEC’s broader Crypto initiative, which seeks to create safer conditions for investors navigating the digital asset sector.

Rising Cases of Pump-and-Dump in Crypto

The launch comes at a time when pump-and-dump schemes are becoming more common in crypto. These scams typically target low-liquidity tokens, often meme coins or hastily created altcoins. These tokens are artificially inflated through aggressive promotion. After this, insiders cash out, leaving retail investors with steep losses.

One recent case involved a so-called CR7 token on the Solana blockchain. One of the many fake tokens jumped to a market cap of over $5 million before collapsing to zero. A prior fake version of the coin was even more damaging, draining $143 million from unsuspecting investors.

Furthermore, Rapper Kanye West’s coin debuted in August, only to collapse shortly after a brief surge. Similar patterns have also been seen with more celebrity-linked cryptos. 

Beyond celebrity tokens, larger-scale scandals have shaken the market. The LIBRA project crashed amid allegations of insider trading and massive liquidity withdrawals. The team behind the token reportedly pulled $87 million from liquidity pools. It was also said that a sniper trader cashed out $107 million, causing the token to plunge by nearly 94%.

The SEC’s Cross-Border Task Force represents a decisive step in tackling the growing global nature of financial fraud.