Enforcement

NYAG ENTERS $4.3 MILLION SETTLEMENT WITH BITCOIN SELLER AND NYDFS LICENSEE COIN CAFÉ OVER ALLEGATIONS OF FAILURE TO REGISTER AND EXCESSIVE FEES

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The New York Attorney General entered into a settlement with BitCoin seller and NYDFS licensee Coin Cafe over allegations of failure to register with the NYAG’s Investor Protection Bureau and charging excessive fees.   According to NYAG allegations in its Assurance of Discontinuance: •    Coin Café — apparently only a seller of only Bitcoin – nonetheless failed … Read more

NYDFS SETTLES WITH INSURERS OFFERING STUDENT HEALTH PLANS FOR OVERCHARGES

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NYDFS settled with several insurers that offer student health plans, alleging a number of violations.  According to the DFS allegations across the four consent orders: •    DFS found that four insurers – 4 Ever Life Insurance Co., Aetna Life Insurance Co., United Healthcare Insurance Co., and Wellfleet NY Insurance Co. — charged unapproved premium rates to … Read more

NYDFS CYBERSECURITY ENFORCEMENT ACTION AGAINST CRYPTO FIRM BITFLYER

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NYDFS issued an enforcement action against bitFlyer USA, Inc., a cryptocurrency exchange, obtaining a $1.2 million penalty. Takeaways from DFS allegations: •   No specific cyber event was involved – enforcement was based on violations identified over two examination cycles •   This suggests cybersecurity is now well integrated into the DFS examination process •   Core violations included the lack … Read more

NYDFS PENALIZES BITPAY $1 MILLION FOR BSA/AML/CYBERSECURITY VIOLATIONS

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NYDFS penalized payment platform Bitpay for alleged violations of its regulations governing BSA/AML requirements and cybersecurity obligations.  Here are some hot takes from DFS’ allegations set forth in its Consent Order: •    Bitpay provides a payment platform for merchants wanting to receive Bitcoin payments; •    Bitpay conducted only one cybersecurity risk assessment over a 4-year period; •    Bitpay … Read more

DOJ COMMITS TO DIVERSITY IN SELECTING MONITORS

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According to a new policy memo to be adopted in the U.S. Justice Manual, “[c]onsistent with the Criminal Division’s approach for the past several years, as well as recent Department-wide guidance, any submission or selection of a monitor candidate by either the Company or the Criminal Division should be made in keeping with the Department’s … Read more

NYDFS SAYS “NO REASONABLE BASIS” TO THINK BINANCE WILL RECEIVE NY BITLICENSE WITHIN SIX MONTHS

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In submitting its Objection to the Third Amended Plan of Reorganization of bankrupt crypto firm Voyager, DFS argues that New York account holders of Voyager are disadvantaged in the plan and should be able to obtain their holdings much sooner, and not after acquisition of them by Binance, because “there is no reasonable basis for … Read more

THE FTC JOINS THE CRYPTO INVESTIGATION PARTY

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According to Coindesk:  “The FTC has commenced an investigation into certain acts and practices of Debtors [Voyager] and Debtors’ employees, directors, and officers, for their deceptive and unfair marketing of cryptocurrency to the public.” The FTC argued that the proposed sale of bankrupt Voyager’s assets might interfere with its investigation. More evidence that proactive regulation … Read more

NYDFS ORDERS PAXOS TO CEASE ISSUING THE BUSD STABLECOIN

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DFS has ordered Paxos to stop issuing BUSD stablecoin, one of the most widely held and traded. According to DFS:  “DFS has ordered Paxos to cease minting Paxos-issued BUSD as a result of several unresolved issues related to Paxos’ oversight of its relationship with Binance through Paxos-issued BUSD. In response, on February 13, 2023, Paxos … Read more

NYU PCCE BLOG CARRIES POST FROM MATTHEW L. LEVINE ON NYDFS MONITORSHIP TRENDS

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In 2012, the New York State Department of Financial Services (DFS) made a regulatory splash when it imposed a two-year monitorship on Standard Chartered Bank as part of an enforcement action.  One commentator noted that the DFS settlement with Standard Chartered had “upended the regulatory dynamics of the international banking world” with this “staggering” resolution.  … Read more

SELF REPORTING TO NYDFS — PART TWO — NEW YORK LAW JOURNAL ARTICLE BY MATTHEW L. LEVINE

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As noted in Part One of this article [LINK HERE: NYLJ11292022562493 DFSReporting Part One], issuance of the second “Monaco Memo” by the U.S. Department of Justice in October 2022 sparked debate anew about the self-reporting of misconduct by corporations.   Settlements between the Justice Department and several large companies since then have brought greater clarity to … Read more