Following the indictments of senior FTX executives, two guilty pleas and related enforcement actions by the U.S. Securities and Exchange Commission and Commodity Futures Trading Commission, the digital asset space faced huge difficulties towards the end of 2022.

In addition, on January 3, 2023, the Federal Reserve, the FDIC (Federal Deposit Insurance Corporation) and the OCC (Office of Comptroller of the Currency) issued a joint statement highlighting “key risks associated with crypto-assets and crypto-asset sector participants.”   Those risks included:

risk of fraud and scams among crypto-asset sector participants

legal uncertainties related to custody practices, redemptions, and ownership rights

inaccurate or misleading representations and disclosures by crypto-asset companies,

significant volatility in crypto-asset markets

susceptibility of stablecoins to run risk

contagion risk within the crypto-asset sector resulting from interconnections among certain crypto-asset participants

risk management and governance practices in the crypto-asset sector exhibiting a lack of maturity and robustness

heightened risks associated with open, public and decentralized networks

U.S. Litigation experts Todd Fishman and Eugene Ingoglia talk through these developments and what they might reveal about potential trends as we enter 2023.