The Crypto Exchange

In this episode of The Crypto Exchange, our host Ethan Ostroff joins his colleagues Chris Willis and Trey Smith to discuss the current landscape of cryptocurrency regulation and enforcement. Our team offers insights to the industry about various topics, including:

• Regulation of cryptocurrency at the federal and state level, and what the regulators are targeting;
• The involvement of state attorneys general in cryptocurrency and enforcement;
• Movement on the legislative front, including New York’s Cryptocurrency Regulation, Protection, Transparency, and Oversight Act, and the U.S. House of Representatives Financial Services Committee release of the Digital Asset Market Structure Discussion Draft; and
• What we can expect in the future with regard to cryptocurrency regulation and enforcement.

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In this episode of The Crypto Exchange, Troutman Pepper Partner Ethan Ostroff welcomes his colleagues Kim Phan and Addison Morgan to discuss the recent enforcement actions brought by the Federal Trade Commission (FTC) against Celsius Network and its co-founders. In addition to permanently banning Celsius Network from consumers' assets, the FTC also fined the company a near record-breaking $4.7 billion.

This is a groundbreaking move by the FTC for two reasons. First, it marks the first time that the agency has filed suit against a digital asset-based company. Second, the FTC's request for civil money penalties is predicated on a novel theory under the Gramm-Leach-Bliley Act (GLBA). Alongside the FTC, the Department of Justice has also filed criminal charges against ex-CEO Alexander Mashinsky. Additionally, the Securities and Exchange Commission and the Commodity Futures Training Commission have filed separate civil enforcement actions against Celsius.

Ethan, Kim, and Addison discuss the intricacies of the FTC's enforcement actions against Celsius Network, including their creative use of the GLBA, and the impact this will have on future enforcement actions against companies in the digital asset ecosystem.

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In this episode of The Crypto Exchange, Troutman Pepper Partner Ethan Ostroff welcomes his colleagues Carlin McCrory and Addison Morgan to discuss a recent case in the Southern District of New York that has been in the news, Rider v. Uphold HQ. In Rider, the court concluded that virtual currency platform operators may be subject to the Electronic Fund Transfer Act (EFTA) and Regulation E.

The plaintiffs in this class action asserted that Uphold HQ violated the EFTA and Regulation E as the result of an alleged security flaw, which enabled unauthorized actors to access plaintiffs' accounts maintained by Uphold HQ. In response to Uphold HQ's motion to dismiss, the court held that cryptocurrencies constituted "funds" within the meaning of the EFTA, enabling plaintiffs to proceed with their claim for violation of the EFTA and claim for negligence per se based on violation of the EFTA. The court held, "Under its ordinary meaning, the term 'cryptocurrency' means a digital form of liquid, monetary assets that constitute 'funds' under the EFTA" based on the dictionary definitions of the terms "funds" and "cryptocurrency."

Ethan, Carlin, and Addison discuss how the court's analysis of the term "funds" within the EFTA may lead to potential significant ramifications for virtual currency platform operators.

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In this episode of The Crypto Exchange, Troutman Pepper Partner Ethan Ostroff welcomes his colleague Mike Lowe to discuss crypto enforcement actions, including criminal enforcement actions related to cryptocurrency. Mike shares his experience in crypto enforcement during his lengthy tenure as a federal prosecutor.

Ethan and Mike also discuss the Department of Justice's (DOJ) history of crypto enforcement, statutes the DOJ uses to charge crypto fraud cases, as well as several crypto-related fraud cases prosecuted by the DOJ. Ethan and Mike further explore the Securities and Exchange Commission's (SEC) civil enforcement actions and how heavily it relies upon the anti-touting provisions of the Securities Act when filing complaints. Lastly, Mike shares his thoughts on what our listeners might expect from the DOJ and the SEC regarding enforcement actions going forward.

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Most consumers have signed up for subscriptions, automatic deliveries, or free trials that convert into a paid subscription. In this episode of The Crypto Exchange, Carlin McCrory welcomes colleagues Mark Furletti and Jill Dolan to discuss legal and regulatory developments related to autorenewals — the recurring payments for these subscriptions. Our panel examines state and federal laws pertaining to negative option offers, including Section 5 of the FTC Act; recent actions by state attorneys general on autorenewal and cancellation policies; and how companies can ensure compliance with relevant requirements.

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In the fourth and final segment of our four-part Crypto Year in Review series, Ethan Ostroff, Keith Barnett, and Carlin McCrory discuss how the U.S. Treasury Department — including the Office of Foreign Asset Control (OFAC) and Financial Crimes Enforcement Network (FinCEN) bureaus — functions in the digital asset space. Our speakers examine how these financial services regulators seek to deter criminal activity, such as money laundering, financing of terrorist activities, AML/CFT violations, and sanctions compliance in the digital asset space in 2022, and what we can expect in 2023.

Be on the lookout for the next episode of The Crypto Exchange, focusing on autorenewals.

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In the third segment of our four-part Crypto Year in Review series, Ethan Ostroff, Keith Barnett, and Addison Morgan discuss state-level regulation of interest-bearing cryptocurrency deposit products. Our speakers explain these product types and cover how state attorneys general and other regulators seek to protect consumer interests amid the rapidly evolving digital asset landscape.

Be on the lookout for the final episode of this four-part podcast series.

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In the second segment of our four-part Crypto Year in Review series, Rene McNulty, Carlin McCrory, and Ethan Ostroff discuss the Federal Reserve and its research and experimentation on Central Bank Digital Currencies (CBDCs), examining the steps that the Fed took toward potential CBDC implementation. Our panelists also review recent crypto-related regulatory developments at the FDIC and OCC, discussing what these actions can tell us about regulatory trends and priorities.

Be on the lookout for our next episode of this podcast series.

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In the first of a four-part Crypto Year in Review series, Carlin McCrory, Keith Barnett, and Ethan Ostroff look at how the CFPB and FTC viewed and regulated cryptocurrency in 2022. The panel examines statements by CFPB Director Rohit Chopra and recent CFPB and FTC enforcement actions, identifying likely regulatory trends for 2023 and beyond.

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In this episode of The Crypto Exchange, Troutman Pepper attorney Carlin McCrory welcomes Disputes, Compliance and Investigations Managing Director Terri Sands from Stout to discuss the risks and regulatory scrutiny that financial institutions and fintechs face as to fraud and the Bank Secrecy Act (BSA). In her position, Terri serves as a leader in the payments, BSA/AML, and OFAC/Sanctions and fraud and risk management areas.

During the podcast, Carlin and Terri discuss a variety of topics on the BSA, including the biggest fraud risks that financial institutions encounter, as well as what they can do to prepare for security threats. With evolving risks, financial institutions and fintechs must ensure their staff is trained and that they have a true understanding of the risks they face on a day-to-day basis. Additionally, Carlin and Terri examine reasons why financial institutions can find themselves under regulatory scrutiny and steps executive management teams can take to avoid these situations.

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