On Monday, January 23, 2022, the New York Department of Financial Services (the “DFS”) released a letter (the “Guidance”) clarifying virtual currency custody and disclosure standards and practices that the DFS expects from entities that have received a “BitLicense” and New York limited purpose trust companies (the “VCE Custodians”).  The Guidance is final and effective immediately.  The Guidance complements existing…

On December 19, 2022, FTX Trading Ltd. issued a press release announcing a process for the voluntary return of avoidable pre-bankruptcy payments to “secure the prompt return of such funds to the FTX Estates for the benefit of customers and creditors.”[1]  Seeking to clawback or “avoid” pre-bankruptcy transfers is commonplace in bankruptcy.  Such transfers may include customer withdrawals, payments to…

In response to “significant volatility and exposure of vulnerabilities in the crypto-asset sector” throughout 2022, on January 3, 2023, the Federal Reserve Board (“FRB”), Federal Deposit Insurance Corporation (“FDIC”) and Office of the Comptroller of the Currency (“OCC”) (together the “Agencies”) released a joint statement (the “Statement”) highlighting risks to banking organizations related to crypto-assets and reiterating that banking organizations…

The recent wave of bankruptcies in the crypto industry, culminating in the collapses of Celsius, BlockFi, and FTX, has spurred financial regulators to adopt a more aggressive tone when discussing their enforcement priorities.[1]  For instance, when announcing charges against FTX Founder Sam Bankman-Fried (“SBF”) for allegedly orchestrating a scheme to defraud FTX’s equity investors,[2] Securities and Exchange Commission (“SEC”) Chair…

On Thursday, December 15, 2022, the New York Department of Financial Services (“DFS”) released a letter (the “Guidance”) outlining the pre-approval application and evaluation process for New York regulated banking organizations that seek to engage in new or significantly different virtual currency-related activities, including virtual currency business activity.  While conceptually similar to the approach federal banking regulators have taken in…