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Ethan G. Ostroff

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Ethan’s practice focuses on financial services litigation and compliance counseling, as well as digital assets and blockchain technology. With a long track record of successful litigation results across the U.S., both bank and non-bank clients rely on him for comprehensive advice throughout their business cycle.

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On December 15, the Consumer Financial Protection Bureau (CFPB) announced it had reached a settlement with medical debt collector Commonwealth Financial Systems, Inc. (Commonwealth) in its lawsuit over alleged illegal debt collection practices. Specifically, the CFPB alleged that Commonwealth failed to conduct reasonable investigations of disputes and violated the Fair Debt Collection Practices Act (FDCPA) by attempting to collect disputed debt without obtaining substantiating documentation. Under the settlement agreement, Commonwealth is banned from debt collection activities, must request CRAs to delete all consumer accounts to which it had previously furnished information, and must pay a $95,000 penalty to the CFPB’s victims relief fund.

On December 13, by a vote of 4-1, the Federal Communications Commission (FCC) adopted new rules aimed at “closing the ‘lead generator’ robocall/robotexts loophole.” Specifically, the rule requires telemarketers to obtain consumer consent to receive robocalls and robotexts one seller/brand at a time, instead of allowing a single consent to apply to multiple telemarketers. This is also known as one-to-one consent. The order does not specifically define “robocall” or “robotext.”

On December 13, New York Governor Kathy Hochul signed into law S4907A, which prohibits hospitals, medical providers, or ambulance services from providing negative information about medical debt to consumer reporting agencies (CRAs). The law also requires that these entities include a provision in their contracts with collection agencies prohibiting the reporting of any portion of a medical debt to a CRA. Any debt that is reported to a CRA will be deemed void. The law became effective immediately after it was signed.

Yesterday, the Office of the Comptroller of the Currency (OCC) issued guidance to banks on managing the risks associated with “buy now, pay later” (BNPL) lending. Specifically, the bulletin addresses BNPL loans that are payable in four or fewer installments and carry no finance charges. The stated aim of the OCC’s guidance is to ensure that these loans are offered in a manner that is safe, sound, and compliant with applicable laws and regulations.

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 20, 2023, the California Department of Financial Protection and Innovation (DFPI) issued an invitation for comments on proposed application-related rulemaking under the Digital Financial Assets Law (DFAL). This move comes after Governor Gavin Newsom signed Assembly Bill 39 and Senate Bill 401, which together create the DFAL. The DFAL and Senate Bill 401, signed into law by Governor Gavin Newsom on October 13, 2023, are set to regulate virtual currency activities within California, effective July 1, 2025.

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.