A recent consent order between the New York State Department of Financial Services (“NYDFS”) and cryptocurrency trading platform, bitFlyer USA (“bitFlyer”), shows that the NYDFS continues to utilize an aggressive enforcement posture with respect to cybersecurity for regulated financial services companies. Notably, the bitFlyer consent order and other recent consent orders demonstrate that NYDFS is no longer waiting for regulated entities to experience a cyber-attack before commencing an enforcement action, and, instead, is using routine examinations to uncover and prosecute companies for failing to comply with the NYDFS’s cybersecurity regulations.
In 2017, the NYDFS promulgated first-of-its-kind regulations establishing cybersecurity requirements for financial services companies. 23 NYCRR Part 500. These regulations were amended once and a proposed second amendment was published in late 2022, with final amendments expected to be adopted sometime later this year.
Continue reading “New York Department of Financial Services Levies $1.2 Million Fine on Cryptocurrency Platform for Violations of Cybersecurity Regulations”
As of March 2022, there are more than 18,000 different crypto currencies in service for a total market capitalization of $2 trillion. In this episode of the Faegre Drinker on Law and Technology Podcast, host Jason G. Weiss chats with Faegre Drinker partner Jeff Blumberg and associate Jane Blaney, to revisit the world of crypto and not only discuss the foundations of crypto currencies, but also explore the world of blockchain and non-fungible tokens, or NFTs.
The conversation tackles a number of questions, including:
- What is blockchain and what makes it different from traditional recordkeeping processes?
- What exactly is crypto currency? What is important to understand about it?
- What exactly is an NFT? How do they work in easy-to-understand concepts?
- What uses are there for blockchain, both using crypto currencies and in uses other than crypto currency?
- Are crypto currencies considered “legal tender”? Can people use them like normal money?
- How can and will NFTs be used in other ways in our society as these concepts grow?
Continue reading “What Are Blockchain, Crypto and NFTs? A Deeper Look – Faegre Drinker on Law and Technology Podcast”
Cryptocurrency has increasingly become an accepted form of financial exchange. However, it has also become a favored form of payment for cyber criminals.
In an effort to deter the use of cryptocurrencies in furtherance of criminal activity, the Federal Bureau of Investigation recently announced the formation of a Virtual Asset Exploitation Unit (VAXU). The VAXU will combine various investigatory, technical, and analytical resources, and the unit is charged with tracking the illicit use of cryptocurrencies and assisting in their seizure. This announcement follows close on the heels of the recent U.S. Department of Justice appointment of veteran federal prosecutor Eun Young Choi as the first director of the newly-created National Cryptocurrency Enforcement Team (NCET).
Continue reading “FBI Announces Increased Focus on Illegal Financial Transactions Involving Cryptocurrency”
In October, the United States Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) published new guidance for the virtual currency industry focusing on compliance with the financial industry’s obligations related to U.S. economic sanctions.
OFAC administers and enforces economic sanctions against targeted and/or sanctioned foreign countries, geographic regions, entities, and individuals to further U.S. foreign policy and national security goals.
As noted in the new guidance, virtual currencies now playing an increasingly prominent role in the global economy. The growing relevance of virtual currency, both as an investment and as a payment method, brings greater exposure to sanctions risks. Specifically, there is an increased risk that a sanctioned entity or an entity in a jurisdiction subject to sanctions might use virtual currency as an alternative to fiat currency in an effort to avoid U.S. sanctions. As such, the OFAC guidance specifically targets technology companies, virtual currency exchanges, virtual currency administrators, virtual miners, digital currency wallet providers, and users.
Continue reading “OFAC Issues Sanctions Compliance Guidance for Virtual Currencies”
When it comes to cryptocurrency, questions abound: What can you purchase with crypto? How can you buy it? Is crypto a passing fad or an innovation that will stand the test of time? In this episode of the Faegre Drinker on Law and Technology Podcast, host Jason G. Weiss sits down with Faegre Drinker’s Jeffrey Blumberg and former Orange County District Attorney Rahul Gupta, a cybercrime prosecutor with experience in cryptocurrency criminal litigation, to talk all things cryptocurrency.
Continue reading “Faegre Drinker on Law and Technology Podcast: A Primer on Cryptocurrency”
The virtual currency market continues to grow, and this growth has fueled increased attention from retail investors and financial regulators. Financial institutions active in the virtual currency market have seen a trend towards increased regulatory oversight and the latest development imposes new client disclosure requirements upon certain companies.
Continue reading “NFA Proposes Enhanced Disclosure Requirements for Members Engaging in Virtual Currency Activities”