On October 11, the leaders of the Commodities Futures Trading Commission (CFTC), Financial Crimes Enforcement Network (FinCEN), and the Securities and Exchange Commission (SEC) issued a joint statement regarding anti-money laundering (AML) compliance for persons engaged in certain activities involving digital assets. While the statement largely reaffirms known agency guidance and existing regulations, it is noteworthy for a number of reasons.

First, the joint statement, issued from multiple regulators, is the first of its kind in the digital asset space with respect to AML and may indicate an intent of regulators to show that their approach to AML compliance is aligned and to coordinate more closely on AML compliance going forward. While each of the three regulators has published guidance regarding digital assets and has engaged in related enforcement actions, there has not been any public indication to date that such efforts have been coordinated across agencies.


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An appellate decision from a provincial high court in northeastern China may help to shed some additional light on the Chinese government’s regulation of virtual currency exchanges in China, the anti-money laundering (AML) and know-your-customer (KYC) expectations placed on these exchanges, and the liability that might accrue to exchanges in the event of criminal activity involving virtual currencies.

The Lekuda (OKCOIN trading platform) case was initially filed in the civil division of the intermediate court of the municipality of Suihua (绥化) in northeastern China, Heilongjiang Province. Coincidentally, China’s northeastern region is also known for Bitcoin mining.  In China, there are three types of litigation (三类诉讼), each with their own set of procedural rules and jurisprudence, and the Lekuda case filed in Suihua was styled as a tort case, a type of civil litigation.  While characterized and classified as a civil tort case, the case also implicates certain criminal and administrative issues at its periphery.

The decision that was recently made publicly available was the July 2016 decision of the second instance court (an appellate decision). The underlying Suihua intermediate court decision has not yet been made publicly available, but may eventually become so.  That said, from the appellate decision, we can learn the basic facts.


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