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.
A U.S. District Court in the Southern District of California recently held that a Federal Rule of Civil Procedure 68 offer of judgment must clearly state that attorneys’ fees and costs are limited or waived, as Arvest Central Mortgage Company (Arvest) learned to its detriment. The plaintiff had a mortgage with Arvest, entered into a forbearance agreement, and made the payments on the property, but claimed Arvest inaccurately reported that he was late on his October 2020 payment. The plaintiff sued Arvest and nine other defendants for violations of the Fair Credit Reporting Act and California’s Consumer Credit Reporting Agencies Act, ultimately resolving his claims against all defendants except Arvest.
On November 30, Massachusetts Attorney General Andrea Joy Campbell announced proposed regulations that would require businesses to clearly disclose the total price of a product at the time it is presented to consumers, provide clear and accessible information on whether fees are optional or required, and simplify the process for cancelling trial offers and recurring charges. The proposed regulations are issued pursuant to the Attorney General’s rule-making power under the Massachusetts Consumer Protection Act. The stated purpose of the proposed regulations is to close gaps within the state’s consumer protection laws and to combat unfair and deceptive business practices related to fees charged across various industries.
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.
Last week, a district court in Nevada held that an undated, model form debt validation notice does not violate the Fair Debt Collection Practices Act (FDCPA). In Bergida v. PlusFour, Inc., the defendant sent a debt validation letter to the plaintiff that followed the model form provided by the Consumer Financial Protection Bureau (CFPB). The letter was not dated. The plaintiff claimed the letter violated FDCPA §§ 1692d, e, f, and g because she could not determine what date was “today” and “now,” which allegedly misled her about the status of the debt, confused her, made the letter seem illegitimate and suspicious, and caused her to spend time and money trying to figure out whether the debt was valid. When considering the defendant’s motion to dismiss, the court applied the least sophisticated debtor standard and found that the plaintiff failed to state a claim.
Earlier this year, a district court for the Middle District of Florida upheld a jury award of $225,000 in punitive damages in a debt collection case finding the defendant’s conduct “reprehensible” based on the physical harm caused to the plaintiff, the defendant’s indifference or reckless disregard of the harm it caused to the plaintiff, the plaintiff’s financial vulnerability, and the defendant’s repeated actions.
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.
A U.S. District Court in the Western District of Wisconsin recently denied both the defendant and plaintiff’s summary judgment motions in a Fair Credit Reporting Act (FCRA) case, holding that the reasonableness of the defendant’s investigation of the plaintiff’s identity theft claim was a triable issue.
On October 12, the U.S. Court of Appeals for the Third Circuit issued a decision rejecting a district court’s finding that the so-called informational injury doctrine established Article III standing for the named plaintiff and putative class in a class action brought under the Fair Debt Collection Practices Act (FDCPA).