by Eric Poer

2025 Priorities for SEC Enforcement: Shadow Trading, AI, and Crypto in the Spotlight

2024 was a pivotal year for SEC enforcement as the Commission significantly ramped up its efforts, filing 583 enforcement actions and obtaining $8.2 billion in financial remedies, a record for the agency.^[1] Penalties against digital-asset participants was a record $4.98 billion in 2024.^[2] As we move forward in 2025, the spotlight will be on shadow trading, artificial intelligence (AI), and cryptocurrency (crypto) enforcement. In its recently released 2025 Division of Examination Priorities, the SEC announced it was prioritizing “perennial and emerging risk areas, such as fiduciary duty, standards of conduct, cyber security and artificial intelligence.”^[3] These emerging areas are poised to drive further regulatory scrutiny and potential legal challenges.

Shadow Trading Ushers in a New Era of Insider Trading Scrutiny

Building on the momentum from the SEC’s recent “shadow trading” case, we expect increased regulatory scrutiny and potential legislative shifts with respect to insider duties.^[4] The case, which expanded the definition of insider trading to include the use of material non-public information to trade in securities of a comparable company, may lead to more aggressive enforcement. Market participants, especially corporate executives and traders, should anticipate increased scrutiny and potential liability, particularly surrounding the issue of economic correlation between companies. Firms should be mindful of these increased risks when establishing compliance and training protocols, and monitoring staff to avoid potential enforcement actions.

AI at the Intersection of Legal Risks and Innovation

Simultaneously, AI has caused significant changes and challenges across industries. The SEC appointed a Chief Artificial Intelligence Officer to oversee effective governance, innovation and risk.^[5] As firms integrate AI into their operations, including in creating investment strategies, they face increased scrutiny from regulators and investors. The SEC has highlighted that examinations could include reviews of compliance policies and procedures, and disclosures to investors about an advisor’s use of AI into its operations.^[6] As an emerging technology, firms should be mindful of the changing landscape and potential liabilities when implementing AI.  For example, proposed SEC rules could change conflict of interest rules and require additional disclosures to investors.^[7]

Crypto Faces High Stakes and Greater Risks in 2025

The SEC’s focus on crypto assets, which includes reviewing potential technological and security risks, will likely continue in 2025.  The recent appointment of Paul Atkins as SEC chair may lead to changes in enforcement. However, as the industry evolves, legal and enforcement risks will remain significant, particularly for those who fail to comply with shifting regulations. On January 21, 2025, Mark Uyeda was designated as the Acting Chairman of the SEC; that same day, among his first actions was launching a cryptocurrency Task Force to create a regulatory framework for crypto assets with the goal of making enforcement mechanisms clearer and more efficient.^[8] In 2024, 73% of cryptocurrency enforcement actions by the SEC alleged fraud, a trend that is likely to continue or increase with the new administration.^[9] As the cryptocurrency sector grows, founders and executives will navigate complex regulatory landscapes while managing investor expectations. The SEC’s increased focus on crypto assets could lead to more enforcement actions, especially for early-stage projects that may face challenges related to misrepresentations, inadequate disclosures, operational shortcomings and cases related to fraudulent conduct. Proactive planning and continuous monitoring of the legal and regulatory landscape will be essential.

[1] https://www.sec.gov/newsroom/press-releases/2024-186
[2] Cornerstone Research, SEC Cryptocurrency Enforcement: 2024 Update
[3] https://www.sec.gov/newsroom/press-releases/2024-172
[4] https://www.sec.gov/enforcement-litigation/litigation-releases/lr-25170
[5] https://www.sec.gov/ai
[6] https://www.sec.gov/files/2025-exam-priorities.pdf
[7] https://www.sec.gov/newsroom/press-releases/2023-140
[8] https://www.sec.gov/newsroom/press-releases/2025-30
[9] Cornerstone Research, SEC Cryptocurrency Enforcement: 2024 Update