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Evan Abrams counsels multinational corporations, financial institutions, and individuals on various international regulatory and compliance matters. He assists foreign and domestic companies in navigating national security reviews by the Committee on Foreign Investment in the United States (CFIUS). He has represented companies in industries including semiconductors, metals, and digital security. Evan’s anti-money laundering (AML) practice focuses on helping financial institutions comply with federal and state AML rules, particularly money transmitters and entities involved in creating, exchanging, or dealing in cryptocurrencies and tokens. Evan counsels clients in a variety of export controls and sanctions matters related to the Export Administration Regulations (EAR), International Traffic in Arms Regulations (ITAR), and various sanctions programs under US and international law. In addition, Evan routinely assists clients on anti-corruption investigations and enforcement actions.

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On January 10, 2024, the Securities and Exchange Commission (“SEC” or the “Commission”) approved the listing and trading of eleven spot bitcoin exchange traded products (“ETPs”). [1]  The Commission declared effective the registration statements for ten of the ETPs on the same date.  This long-awaited approval stands in contrast to the SEC’s sixteen prior denials

On November 7, 2023, the Consumer Financial Protection Bureau (CFPB) announced a notice of proposed rulemaking (NPRM) that would establish CFPB supervisory authority over certain nonbank companies “participating in a market for ‘general-use digital consumer payment applications.'”

Overview

The CFPB seeks to subject nonbank companies that provide digital payment wallets and applications to the CFPB’s

On October 19, 2023, the U.S. Department of the Treasury’s (“Treasury”) Financial Crimes Enforcement Network (FinCEN) announced a Notice of Proposed Rulemaking (NPRM) that would implement new recordkeeping and reporting requirements on domestic financial institutions and domestic financial agencies, related to transactions that they know, suspect, or have reason to suspect involve convertible virtual currency

After months of anticipation, a federal judge has finally ruled in the closely watched case of Joseph Van Loon, et al. v. Department of Treasury, et al.  This important case addressed challenges to the US Department of the Treasury’s Office of Foreign Assets Control (OFAC) decision to impose sanctions on Tornado Cash as a Specially Designated National and Blocked Person (SDN).  The judge granted summary judgement in favor of OFAC, finding it had sufficient legal authority to designate Tornado Cash, and denied summary judgement on the plaintiffs’ claims.  Shortly after that ruling, OFAC announced the SDN designation of Roman Semenov, one of three alleged co-founders of Tornado Cash, and the Department of Justice (DOJ) charged Semenov and Roman Storm, another Tornado Cash founder, with multiple alleged criminal violations related to anti-money laundering (AML) and economic sanctions laws. Continue Reading Critical Tornado Cash Developments Have Significant Implications for DeFi AML and Sanctions Compliance

The Department of the Treasury’s recently issued Illicit Finance Risk Assessment of Decentralized Finance is principally intended to provide insight on how illicit actors are abusing decentralized finance (DeFi) services, as well as anti-money laundering (AML) and countering the financing of terrorism (CFT) vulnerabilities unique to DeFi.  However, the report also contains critical insight on

On January 18, 2023, the US Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) issued an order identifying the virtual currency exchange Bitzlato Limited (Bitzlato) as a “primary money laundering concern” in connection with Russian illicit finance.  The order, which is the first of its kind, was issued pursuant to Section 9714(a) of the

On December 16, FinCEN issued a notice of proposed rulemaking (NPRM) entitled “Beneficial Ownership Information Access and Safeguards, and Use of FinCEN Identifiers for Entities.” The NPRM is intended to implement the Corporate Transparency Act (CTA) and, in particular, to govern which entities may access corporate beneficial ownership information (BOI) that certain entities will soon

On October 11, 2022, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) and Financial Crimes Enforcement Network (FinCEN) announced enforcement actions against Bittrex, Inc. (Bittrex), a privately-owned digital asset trading platform based in Bellevue, Washington, for apparent violations of anti-money laundering (AML) laws and of multiple sanctions programs. A settlement of over $24 million was announced by OFAC and a $29 million fine was announced by FinCEN. FinCEN will credit payment of the OFAC settlement amount toward Bittrex’s potential liability with FinCEN, meaning Bittrex will pay just over $29 million in total. Joint enforcement action between OFAC and FinCEN is uncommon—the settlements mark the first instance of parallel enforcement actions by OFAC and FinCEN in the digital asset sector.

The parallel settlements provide insight into certain sanctions and AML risks in the digital asset sector and illustrate how OFAC and FinCEN rules intersect and overlap in part: for example, that OFAC violations can trigger suspicious activity report filing obligations.Continue Reading OFAC and FinCEN Announce Enforcement Actions Against Bittrex

On August 1, Robinhood Crypto, LLC (RHC) entered a consent order with the New York State Department of Financial Services (DFS) requiring RHC to pay a $30 million fine for violating (1) New York’s virtual currency regulatory regime known as the BitLicense, (2) a Supervisory Agreement entered with DFS as a condition of its BitLicense, (3) anti-money laundering (AML) requirements applicable to money transmitters, and (4) other requirements related to transaction monitoring, filtering, and cybersecurity. The consent order, which is DFS’s first enforcement action under the BitLicense regime or against a digital currency business, offers several important takeaways for blockchain companies operating or seeking to operate in the state, including (1) the importance of scaling up compliance processes commensurate with business growth, (2) the risks of relying on compliance programs of affiliated entities, (3) the importance of well-developed reporting lines in compliance programs, and (4) the consequences of filing “improper” certifications under DFS’s transaction monitoring and cybersecurity rules.
Continue Reading DFS’s First Enforcement Action Against a Blockchain Company: Lessons Learned

On August 8, 2022, the US Department of the Treasury’s Office of Foreign Assets Control (OFAC) announced the imposition of sanctions on the decentralized digital asset mixer Tornado Cash. The action marks the first time OFAC has targeted an on-chain decentralized protocol. To date, OFAC has not issued any guidance specific to decentralized finance (DeFi) as part of its broader sanctions guidance for the “virtual currency” industry, but the Tornado Cash action lays down an important marker and makes clear that OFAC will target projects or protocols engaged in illicit activity regardless of their centralized or decentralized status. (Our prior blog post on OFAC’s general virtual currency guidance is available here).

According to OFAC, Tornado Cash was “used to launder more than $7 billion worth of virtual currency since its creation in 2019,” including over $455 million stolen by the Lazarus Group, a North Korean-backed hacking group that was previously targeted by OFAC sanctions. In announcing the action, Under Secretary of the Treasury for Terrorism and Financial Intelligence Brian Nelson explained, “Despite public assurances otherwise, Tornado Cash has repeatedly failed to impose effective controls designed to stop it from laundering funds for malicious cyber actors on a regular basis and without basic measures to address its risks.”Continue Reading OFAC Designates Tornado Cash in First Action Against a Decentralized Platform