Jonathan A. Forman

Subscribe to all posts by Jonathan A. Forman

NYS DFS Focuses on Cybersecurity Violations and Increasing Crypto Resources

By George Stamboulidis, Teresa Goody Guillén, Michelle Tanney, Jonathan A. Forman, Robert A. Musiala and Sydney Park on May 17, 2023 Posted in Alert

On May 1, 2023, the New York State Department of Financial Services (DFS or Department) issued a consent order (Consent Order), imposing a $1.2 million fine on bitFlyer USA, a cryptocurrency trading platform and custodial wallet service provider. The Consent Order described various alleged failures by bitFlyer USA to establish and maintain an effective cybersecurity program, as … Continue Reading

U.S. Treasury Dept. Publishes Risk Assessment Addressing Illicit Finance Risks of DeFi

By Robert A. Musiala, Teresa Goody Guillén, Joanna F. Wasick, Kevin Edgar, Adam Gale, Jonathan A. Forman, Veronica Reynolds and Christopher Lamb on April 20, 2023 Posted in Alert

Background and Scope The Assessment was drafted by Treasury’s Office of Terrorist Financing and Financial Crimes (“TFFC”), in consultation with multiple U.S. agencies, including the Departments of Homeland Security, Justice, and State; the Commodity Futures Trading Commission (“CFTC”); Office of the Comptroller of the Currency; and the Securities and Exchange Commission (“SEC”). The TFFC also … Continue Reading

US Crypto Exchange Consents to $100M DFS Settlement for AML Compliance Failures

By Jonathan A. Forman, Teresa Goody Guillén, Christopher Lamb, Keith R. Murphy, Robert A. Musiala, Veronica Reynolds and Joanna F. Wasick on January 23, 2023 Posted in Blockchain, Cryptocurrency

On January 4, 2023, the New York State Department of Financial Services (“DFS”) announced that Coinbase, Inc., a major U.S. cryptocurrency exchange, will pay a $50 million penalty and invest an additional $50 million in its compliance function over the next two years to remediate significant violations of the New York Banking Law and the … Continue Reading

Major U.S. Crypto Exchange Consents to $29 Million Penalty for Historic BSA and OFAC Violations Body

By Jonathan A. Forman, Teresa Goody Guillén, Keith R. Murphy, Robert A. Musiala, Veronica Reynolds and Joanna F. Wasick on October 27, 2022 Posted in Alert

On October 11, 2022, the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) and Office of Foreign Assets Control (OFAC) announced a $29 million civil monetary penalty against Bittrex, a major U.S. cryptocurrency exchange, as part of a global settlement with FinCEN and OFAC related to Bittrex’s alleged historic violations of the Bank … Continue Reading

Treasury Plans Significant Actions to Curb Illicit Digital Asset Financing

By Jonathan A. Forman, Robert A. Musiala and Christina Gotsis on October 19, 2022 Posted in Alert

As part of a coordinated effort with the U.S. Secretary of State, Attorney General, Secretary of Commerce, Secretary of Homeland Security, Director of the Office of Management and Budget, Director of National Intelligence, and heads of other relevant agencies, Treasury developed the Action Plan to detail the evolving threats and risks facing the digital asset … Continue Reading

White House Outlines Key Action Items Based on EO Reports Addressing Digital Assets

By Kevin Edgar, Jonathan A. Forman, Adam Gale and Robert A. Musiala on September 29, 2022 Posted in Blockchain

On Sept. 16, 2022, the White House released a Fact Sheet providing key findings and action items arising from the nine reports addressing digital assets that have been submitted to the president to date consistent with the EO. The Fact Sheet provides a list of various directives and initiatives that the Administration plans to take … Continue Reading

SEC Chair Stands Firm: ‘Vast Majority’ of Cryptocurrency Tokens Are Securities

By Teresa Goody Guillén, Joanna F. Wasick, Kevin Edgar, Robert A. Musiala, Michelle Tanney, Veronica Reynolds, Alex Karambelas and Jonathan A. Forman on September 9, 2022 Posted in Blockchain, White Collar

In prepared remarks delivered at the Practising Law Institute’s “SEC Speaks” program on Sept. 8, Chair Gensler emphasized and reiterated his long-standing position that the vast majority of cryptocurrency tokens are securities, and he noted that “only a small number of tokens, even though they may represent a significant portion of the crypto market’s aggregate … Continue Reading

Applying the Bank Secrecy Act, FinCEN Regulations, and Sanctions to the Nascent NFT Market

By Joanna F. Wasick, Jonathan A. Forman, Robert A. Musiala and Lauren Bass on August 4, 2022 Posted in NFT

Non-fungible tokens (NFTs) often involve two areas with known money laundering and terrorist financing risks: cryptocurrencies and high-value assets, like art. As detailed below, the U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN) has provided guidance on the applicability of statutes related to anti-money laundering and terrorist financing (AML) to cryptocurrencies. Recent actions and statements … Continue Reading

SEC and DOJ Bring Parallel Crypto Insider Trading Cases; SEC Alleges Nine Tokens Are Securities

By John J. Carney, Kevin Edgar, Jonathan A. Forman, Adam Gale, Teresa Goody Guillén, Robert A. Musiala, Veronica Reynolds and Michelle Tanney on July 25, 2022 Posted in Blockchain

Significant parallel actions commenced this week by the Securities and Exchange Commission (SEC) and the Department of Justice (DOJ) bring crypto fraud enforcement into the spotlight, with the SEC alleging that multiple tokens listed on Coinbase are securities. In its first insider trading case of “crypto asset securities,” the SEC charged a former Coinbase product manager, his … Continue Reading

SEC Signals Ramp-Up in Crypto Enforcement by Nearly Doubling Its Crypto Assets Cyber Unit Staff

By Joanna F. Wasick, Teresa Goody Guillén, Veronica Reynolds, Adam Gale, John J. Carney, Jonathan A. Forman and Robert A. Musiala on May 5, 2022 Posted in Blockchain

On May 3, the U.S. Securities and Exchange Commission (SEC) announced the expansion of its Crypto Assets and Cyber Unit (the Unit f/k/a the Cyber Unit) to 50 staff members, nearly double the Unit’s former size, including supervisors, investigative staff attorneys, trial counsel and fraud analysts. The Unit is a group within the Division of … Continue Reading

Executive Order Launches Comprehensive US Policy and Action Plan for Digital Assets

By Robert A. Musiala, Teresa Goody Guillén, Joanna F. Wasick, Veronica Reynolds, Kevin Edgar, Jonathan A. Forman and Adam Gale on March 17, 2022 Posted in Blockchain, Cryptocurrency

On March 9, 2022, President Joe Biden signed the Executive Order on Ensuring Responsible Development of Digital Assets (EO) and the White House released a corresponding fact sheet summarizing related key policy objectives. As discussed in more detail here, this is a landmark moment for the U.S. cryptocurrency market. … Continue Reading

SEC Scrutinizes Use of Fintech by Broker-Dealers and Investment Advisers

By Teresa Goody Guillén, Jonathan A. Forman and Madison Gaudreau on September 2, 2021 Posted in FinTech, Securities & Exchange Commission

The Securities and Exchange Commission (“SEC”) recently issued a request for information and public comment on the use of new and emerging technologies by investment advisers and broker-dealers that suggests potential regulatory action to come.[1] According to its release, the SEC is seeking to understand how registrants — whether online brokerages, robo-advisers, internet investment advisers, … Continue Reading

SEC Doubles Down on Crypto Enforcement

By John J. Carney, Teresa Goody Guillén, Adam Gale, Jonathan A. Forman and Michelle Tanney on August 10, 2021 Posted in Bitcoin, Blockchain, Cryptocurrency, Enforcement, Securities & Exchange Commission, White Collar

In a speech before the Aspen Security Forum on August 3, 2021, Securities and Exchange Commission (“SEC” or “Commission”) Chair Gary Gensler urged lawmakers to provide him with the power to police cryptocurrency trading, referring to it as the “Wild West.”[1] While he noted that the views he was sharing were his own and not … Continue Reading

SEC Charges Ripple and Two Executives, Alleging XRP Is a Security

By Jonathan A. Forman, Adam Gale, Teresa Goody Guillén and Robert A. Musiala on January 5, 2021 Posted in Securities & Exchange Commission

On Dec. 22, 2020, the Securities and Exchange Commission (SEC or the Commission) filed an action against Ripple Labs Inc. (Ripple or the Company) and two of its executives, alleging that they violated Section 5 of the Securities Act of 1933, as amended (Securities Act) by raising over $1.3 billion through an unregistered, ongoing securities … Continue Reading

Telegram: Deconstructing One of the Biggest Blockchain Cases of 2020

By Robert A. Musiala, John Harrington, Teresa Goody Guillén, Adam Gale, Jonathan A. Forman and Veronica Reynolds on December 14, 2020 Posted in Blockchain

The Telegram case is arguably the most important case of 2020 involving the legal classification of blockchain-based digital assets. Because it is often cost-prohibitive for companies to challenge the government in court, the Telegram litigation offered a unique opportunity for the parties to present arguments on several complex legal issues. Given the lack of judicial … Continue Reading

SEC Wins Case Against Kik and Adds Precedent for Digital Assets

By Adam Gale, Teresa Goody Guillén, Robert A. Musiala and Jonathan A. Forman on October 12, 2020 Posted in Securities & Exchange Commission

On Sept. 30, the United States District Court for the Southern District of New York granted the U.S. Securities and Exchange Commission’s (SEC) motion for sum mary judgment against Kik Interactive Inc. (Kik) and denied Kik’s cross-motion for summary judgment. As we previously reported, the SEC challenged Kik’s compliance with the federal securities laws in … Continue Reading

New York Appellate Court Confirms Attorney General’s Broad Investigative Powers into the Cryptocurrency Industry

By Jonathan A. Forman, Teresa Goody Guillén and Robert A. Musiala on July 15, 2020 Posted in Cryptocurrency

On July 9, the Appellate Division of the Supreme Court of New York, First Department (First Department) issued a significant decision in James v. iFinex that confirmed the broad authority of the New York State Attorney General (NYAG) to investigate potential fraud. The decision is significant because it is the first appellate decision to apply … Continue Reading

SEC and Kik Present Competing Arguments on Application of Securities Laws to Blockchain Tokens

By Teresa Goody Guillén, Jonathan A. Forman and Robert A. Musiala on May 20, 2020 Posted in Blockchain

On May 8, 2020, the U.S. Securities and Exchange Commission (SEC) and Kik Interactive Inc. (Kik) finished briefing their cross motions for summary judgment, which were previously filed on March 20, with opposition briefs filed on April 24. The briefing totals more than 400 pages of arguments by the parties in the SEC’s court challenge … Continue Reading

Court Applies Single Scheme Theory To Grant the SEC’s Preliminary Injunction in Telegram Cryptocurrency Case

By John Harrington, John Gherlein, Teresa Goody Guillén, Jonathan A. Forman, Adam Gale and Robert A. Musiala on April 2, 2020 Posted in Cryptocurrency

On March 24, Judge P. Kevin Castel of the U.S. District Court for the Southern District of New York granted the Securities and Exchange Commission’s (SEC) motion for a preliminary injunction in the closely followed Telegram case. The preliminary injunction continues to prevent the delivery by Telegram Group Inc. and TON Issuer (collectively, Telegram) of … Continue Reading

New FinCEN Guidance for Cryptocurrency and Blockchain Businesses

By Laura E. Jehl, Robert A. Musiala, Jonathan A. Forman and Joanna F. Wasick on June 11, 2019 Posted in Banking

On May 9, 2019, the Financial Crimes Enforcement Network (FinCEN) published FIN-2019-G001, which provides new guidance on the application of the Bank Secrecy Act (BSA) and FinCEN regulations to money services businesses that engage in money transmission involving convertible virtual currencies. While stating that it “does not establish any new regulatory expectations or requirements,” the … Continue Reading

Hard for ICOs to Avoid US Courts: Personal Jurisdiction Found in Two Recent Securities Cases Over Foreign ICO Defendants

By Marc Powers and Jonathan A. Forman on September 27, 2018 Posted in ICOs

Over the past year, the plaintiffs’ bar and Securities and the Exchange Commission (SEC) have brought class and enforcement action proceedings, respectively, against those involved with the issuance and marketing of initial coin offerings (ICOs), including those located outside the United States. The proceedings involving foreign defendants present the interesting and threshold issue in these … Continue Reading

Blockchain Developments: Food Supply Chain, Bitcoin ETPs, ICOs and Tech Adoption

By Robert A. Musiala, Njeri Chasseau, Jonathan A. Forman and Jaime B. Petenko on August 3, 2018 Posted in Blockchain, Food Supply Chain, ICOs

In this issue: • Multiple Pilots Drive Momentum for Leveraging Blockchain in the Food Supply Chain • SEC Rejects Winklevoss Bitcoin Trust, Commissioner Dissents • New Reports Detail ICO Scrutiny and Seek to Provide Clarity • Blockchain Adoption Continues in Both Institutional and Startup Environments Multiple Pilots Drive Momentum for Leveraging Blockchain in the Food … Continue Reading

ICOs Avoiding US Citizens Not Immune To Lawsuits In US

By Marc Powers, Jonathan A. Forman and Tiffany A. Miao on June 6, 2018 Posted in Securities & Exchange Commission

Last summer, the Securities and Exchange Commission (SEC) issued its 21(a) report concluding that, according to the U.S. Supreme Court decision in SEC v. W.J. Howey Co., the DAO token qualified as a “security” under the federal securities laws and thus, its offering had to either be registered with the SEC or subject to a … Continue Reading