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Matthew Orso

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Matt is a skilled advocate for clients subject to regulatory oversight, including financial services companies. He provides guidance by developing informed strategies for investigations, enforcement matters, compliance, and litigation.

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In this episode of the Crypto Exchange, Ethan Ostroff is joined by colleagues Pete Jeydel and Matt Orso to discuss a recent landmark decision from the Fifth Circuit regarding Tornado Cash. The court ruled that the Office of Foreign Assets Control (OFAC) exceeded its authority by sanctioning immutable smart contracts created by Tornado Cash. This decision has significant implications for the regulation of decentralized finance (DeFi) technologies under the International Emergency Economic Powers Act (IEEPA).

Yesterday, the Board of Governors of the Federal Reserve System (FRB), Consumer Financial Protection Bureau (CFPB), Federal Deposit Insurance Corporation (FDIC), Financial Crimes Enforcement Network (FinCEN), National Credit Union Administration (NCUA), Office of the Comptroller of the Currency (OCC), and state financial regulators issued a joint statement to provide covered financial institutions with strategies and examples of effective risk management and other practices to identify, prevent, and respond to elder financial exploitation. The agencies emphasized that the joint statement does not establish new supervisory expectations or impose new regulatory requirements.

The U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) recently issued a report entitled Identity-Related Suspicious Activity: 2021 Threats and Trends highlighting threat patterns and trend information derived from financial institutions’ Bank Secrecy Act (BSA) filings for the calendar year 2021. Financial institutions are required to file suspicious activity reports no later than 30 calendar days after the initial detection of facts that could constitute suspicious activity.

Cryptocurrency, with its anonymity and decentralization, has revolutionized financial transactions. However, it has also opened doors for illicit activities, such as terrorist financing. Below we explore the role of cryptocurrency in terrorist financing, focusing on Hamas, a U.S.-designated terrorist organization.

On November 20, the Securities and Exchange Commission (SEC) instituted a civil enforcement action against Kraken, a major U.S. cryptocurrency exchange. The SEC alleged Kraken operated as an unregistered broker, dealer, exchange, and clearing agency, in violation of the Securities Exchange Act. The SEC’s lawsuit aims to prohibit Kraken from continuing these activities and seeks an unspecific amount of civil monetary penalties.

On November 21, the U.S. Department of Justice (DOJ) unsealed its criminal indictment against Binance.com (Binance), the world’s largest cryptocurrency exchange, and its CEO, Changpeng “CZ” Zhao (CZ). The indictment against Binance contains three charges: (1) conspiracy to violate the Bank Secrecy Act (BSA) by failing to implement and maintain an effective anti-money laundering (AML) program; (2) conducting an unlicensed money services business; and (3) willful violation of the International Emergency Economic Powers Act (IEEPA). On the same day, at a press conference also attended by Treasury Secretary Janet Yellen and Commodity Futures Trading Commission (CFTC) Chairman Russ Behnam, Attorney General Merrick Garland announced Binance pled guilty to all charges, and the DOJ is requiring Binance to pay approximately $4.3 billion in criminal penalties and forfeiture. CZ also pled guilty to violating the BSA by failing to maintain an effective AML program. As a result, he must resign as Binance’s CEO and is awaiting criminal sentencing.

On October 13, California Governor Gavin Newsom (D) signed Assembly Bill 39 (Digital Financial Assets Law). This new law broadly empowers the California Department of Financial Protection and Innovation (DFPI) to govern “digital financial asset business activity” and prohibits entities from engaging in such activity with California residents without obtaining a license from the DFPI, among other criteria.

The Securities and Exchange Commission’s Division of Examinations has outlined its 2024 Examination Priorities, with a significant focus on cryptocurrency, emerging technology, and Anti-Money Laundering (AML) laws. This has important implications for financial services. Our Regulatory Oversight blog has the details; key highlights are below.

In this episode of The Consumer Finance Podcast, Troutman Pepper Partners Chris Willis and Matthew Orso discuss lessons learned from bank internal investigations. They explore the trigger points that give rise to these investigations, provide useful advice for banks regarding their investigations, discuss how to avoid common issues, and suggest remedial measures to prevent issues from repeating.

On October 19, the Securities and Exchange Commission (SEC) dismissed its claims against Ripple Labs, Inc. (Ripple) executives Bradley Garlinghouse and Christian Larsen for allegedly aiding and abetting Ripple’s violations of the Securities Act with respect to its “institutional sales” of XRP. The Southern District of New York had deemed “institutional sales” to be unregistered securities in its July summary judgment decision, however, at that time the court reserved judgment as to the aiding and abetting claims against the executives. The matter was set for trial in 2024.