On May 3rd, New York Attorney General Letitia James introduced legislation that, if passed, would substantially increase oversight and regulation of the cryptocurrency industry in New York. James touts the bill as the “Crypto Regulation Protection, Transparency and Oversight Act,” also to be known as the “CRPTO Act.” (the “Bill”).Continue Reading NYAG Bill Seeks to “Bring Order” to Crypto Industry
The Securities Exchange Commission (“SEC” or “Commission”) has taken action against Genesis Global Capital, LLC (“Genesis”) and Gemini Trust Company, LLC (“Gemini”) (collectively, “Defendants”) in a recently-filed complaint alleging that the crypto companies violated federal securities laws by engaging in the unregistered offer and sale of securities in the form of their “Gemini Earn Agreements.” In doing so, the Commission not only relied upon the mainstay Howey Test for determining whether an agreement is a security, but also summoned Howey’s lesser-known cousin, the Reves Test, notably leading with the latter in its complaint.Continue Reading SEC Showcases Lesser-Known Legal Theory in Crypto Lending Suit
New York’s chief law enforcement agency recently squandered an opportunity to bring much needed guidance to the digital assets space. On October 18, 2021, the Office of New York Attorney General, Letitia James (“NYAG”), issued a press release warning New York businesses that offer interest-bearing accounts to customers depositing virtual currency without having registered under New York General Business Law § 352, et seq. (the “Martin Act”) are breaking the law.
Continue Reading NYAG’s Warning to Crypto Businesses Muddies Regulatory Waters; Compliance Requirements Remain Elusive
Last week, Coinbase Global Inc. (“Coinbase”) headed off confrontation with the Securities and Exchange Commission (“SEC”) by announcing it was shelving a much ballyhooed digital asset lending product, Lend. The announcement came two weeks after Coinbase revealed that it had received a Wells notice from the SEC warning the company of its plans to sue over Coinbase’s planned October Lend launch.
Continue Reading A September to Remember: Coinbase Avoids SEC Clash by Dropping Crypto Lend Product
The Office of New York State Attorney General Letitia James (“NYAG”) has filed a lawsuit to shut down technology company Coinseed. The state has accused the firm of selling unregistered securities in the form of digital tokens and operating as an unregistered broker-dealer while making material misrepresentations about the company, its management team, and fees charged to investors in connection with cryptocurrency trades.
Continue Reading New York Attorney General Sues to Shutter Cryptocurrency Trading Firm Coinseed
On January 30, 2020, the Department of Defense (“DOD”) released its Cybersecurity Maturity Model Certification (“CMMC”) v.1.0, after releasing several draft versions of the document over the past year. …
Continue Reading CMMC Version 1.0: Enhancing DOD’s Supply Chain Cybersecurity
At the end of 2019, the Department of Defense (“DoD”) took another step to limit the potential cyber risks posed by telecommunications equipment manufactured by Chinese companies (and potentially Russian…
Continue Reading DoD’s Squeeze of Chinese Telecom Equipment Continues
To gain insight into where the Securities and Exchange Commission (“SEC”) and Commodity Futures Trading Commission (“CFTC”) have been focusing their oversight and what their priorities will be in 2020, look no further than their recent words and deeds. A common thread running through the recent public statements and enforcement activity of both agencies is a commitment to maximizing the resources at their disposal to expedite resolutions, whether by leveraging technology, deploying multi-pronged approaches, engaging in industry outreach, or coordinating with fellow regulators.
Continue Reading Regulatory Moves Show Financial Watchdogs Working Smarter, if Not Harder
Under its new leader, the New York Department of Financial Services (“DFS”) has staked out high ground for itself by self-identifying as the “regulator of the future” DFS’s pronouncement came in a July press release issued about a month after Linda Lacewell was confirmed as the agency’s third superintendent. The press release, issued to announce the creation of a new Research and Innovation Division, signals that DFS is attempting to harness the increasing technological tools available to regulators, while making New York an attractive place for financial firms to do business. “The financial services regulatory landscape needs to evolve and adapt as innovation in banking, insurance and regulatory technology continues to grow,” Lacewell said in the press release. “This new division and these appointments position DFS as the regulator of the future, allowing the Department to better protect consumers, develop best practices, and analyze market data to strengthen New York’s standing as the center of financial innovation.”
Continue Reading New York’s Department of Financial Services: the Self-Styled “Regulator of the Future”
The Enforcement Division of the United States Securities and Exchange Commission (“SEC”) recently released its annual enforcement report (“Report”) for fiscal year 2018. The Report reflects an increased focus on retail investors, cryptocurrency, cybercrime, and individual accountability. Further, it showcases that SEC enforcement continues to be robust under the Trump administration, despite industry and media expectations to the contrary.
In fiscal year 2018, the SEC brought 821 enforcement actions, an approximately 8.8% increase from last year. The SEC collected approximately $3.9 billion in monetary penalties, a 4% increase from last year. Notably, however, a significant portion of this amount came from a single case, in which $1.8 billion in disgorgement and penalties were awarded for a large-scale corruption scheme. Moreover, while total monetary penalties rose, there was a decrease in the total amount of disgorgement imposed. This is likely due in part to the Supreme Court’s 2017 Kokesh decision, which held that SEC claims for disgorgement are subject to a five-year statute of limitations.
Continue Reading SEC Enforcement’s Annual Report Prioritizes Retail Investors, Cryptocurrency, Cybercrime, and Individual Accountability
Over the past couple of years, the crypto industry has come under heavy scrutiny from skeptical regulators seeking to root out fraud and protect investors amid the initial coin offering boom that generated over $4 billion in 2017. However, this skepticism is starting to give way to a more business-friendly attitude.
Crypto firms have made notable headway with regulators in recent months, securing authorizations to act as custodians of digital assets and working towards approval of the first bitcoin-based exchange traded fund (“ETF”). These developments may reflect an evolving collaborative environment that bodes well for the future of blockchain-based innovations.
Continue Reading Crypto Firms Make Inroads with State and Federal Regulators