In another installment of the continuing saga surrounding the shuttering of the Silk Road online marketplace and arrest of its alleged creator and operator, Ross William Ulbricht, a Southern District of New York judge denied Ulbricht’s motion to dismiss the four-count indictment against him.
Continue Reading Silk Road’s Ulbrecht Fails in Dismissal Bid, Court Strengthens Federal Bitcoin Enforcement

Yesterday, the Securities and Exchange Commission (“SEC”) announced that Erik Voorhees (“Voorhees”), co-owner of Bitcoin-related websites SatoshiDICE and FeedZeBirds, has agreed to pay approximately $50,000 to settle allegations regarding the unregistered sale of securities.    

Late last month, New York Department of Financial Services (“DFS”) Superintendent Benjamin Lawsky (“Lawsky”) (accompanied by DFS Assistant Deputy Superintendent Maria Filipakis, General Counsel Danny Alter, and Deputy General Counsel Dana Syracuse) presided over two days (five panels) of virtual currency-related hearings.  (To view any of the panel comments in their entirety, visit  The hearings represent the most recent activity by New York’s top financial regulator concerning Bitcoin, which began last August when twenty-two industry participants received subpoenas in connection with Lawsky’s launch of an “information gathering” inquiry.  The hearings appear to have solidified Lawsky’s intent to introduce a new regulatory framework for virtual currency firms doing business in New York.  In light of the various testimonies at the hearings, Lawsky’s announcement raises many questions regarding the purpose and scope of such new regulatory framework.

The United States Department of Treasury Financial Crimes Enforcement Network (“FinCEN”) supplemented its March 18, 2013 guidance on the applicability of federal money transmission regulations to virtual currency “miners” and investors with two letter rulings on January 30, 2014.  Both rulings are fact specific, but provide information and insight into FinCEN’s views on regulation of various participants in the virtual currency ecosystem under the Bank Secrecy Act (“BSA”).  The rulings establish that:
Continue Reading FinCEN Issues New Virtual Currency-Related Letter Rulings

True to the schedule he released last week, New York Department of Financial Services (“DFS”) Superintendent Benjamin Lawsky (“Lawsky”) (accompanied by DFS Assistant Deputy Superintendent Maria Filipacas, General Counsel Danny Alter, and Deputy General Counsel Dana Syracuse) presided over two days of virtual currency-related testimony this week.  Noting that he did not want regulation to stifle innovation, Lawsky  maintained a cordial and yet authoritative tone with each of the panels, comprised of carefully-selected academics, law enforcement, investors, and industry participants who were expected to, and did, offer varying views.  The pervasive message of the testimony (offered both in writing and in-person), was that virtual currency is here to stay, and that some amount of regulation was not necessarily a bad thing.  The deepest divides revolved around whether existing regulatory framework was sufficient to mitigate the perceived risks of virtual currency use, and how new regulations should take shape. 
Continue Reading New York Department of Financial Services Scrutinizes Bitcoin

This morning Superintendent Benjamin Lawsky of the New York Department of Financial Services (“DFS”) released a notice detailing the schedule and lineup of the virtual currency hearings he scheduled for next week (January 28th and 29th).  The hearings will be divided into “panels” comprised of investors, academics, law enforcement, regulatory authorities, and crypto currency entrepreneurs.  Some well-known investors (Barry Silbert, Jeremy Liew, Fred Wilson, and Cameron and Tyler Winklevoss) will kick off the hearings on January 28th; while Cyrus Vance, Jr. (District Attorney of New York County) and Richard Zabel (Deputy US Attorney for the Southern District of New York) will lead the second day of hearings.  Although not all of the panels have been filled, a rough sketch of the topics on the agenda include:
Continue Reading New York Department of Financial Services Announces Witness Lineup for BitLicense Hearings

Delaware Senator Tom Carper’s quest to mark uncharted Bitcoin-related territory continued this week with a request that the Commodity Futures Trading Commission (“CFTC”) elaborate on any plans it has to regulate the virtual currency industry.  According to Senator Carper, head of the Senate Homeland and Governmental Affairs Committee, “we read about a new venture in the digital currency space nearly every day, [and] it is important that government agencies respond appropriately and in a timely manner with thoughtful policy and oversight. Those willing to take risks and play by the rules should have the opportunity to thrive without the fog of uncertainty.”
Continue Reading Delaware Senator Challenges the CFTC to Commit to a Bitcoin Regulation Strategy

On January 10, 2014, the New York Department of Financial Services (DFS) announced that it will hold public hearings on January 28 and 29, 2014 regarding the regulation of virtual currencies.  This announcement comes approximately two months after DFS Superintendent Benjamin Lawsky (“Lawsky”) announced his intentions to hold hearings on the possibility and feasibility of issuing a “BitLicense” specific to virtual currency transactions and activities.
Continue Reading New York Department of Financial Services Schedules Hearings on Viability of Virtual License

On November 14, 2013, New York State Department of Financial Services (NYDFS) Superintendent Benjamin M. Lawsky announced that the NYDFS will take the next step in its “inquiry into the appropriate regulatory guidelines for virtual currencies” by holding a public hearing to “consider the possibility and feasibility of NYDFS issuing ‘BitLicenses’ specific to virtual currency transactions and activities.”  The first step of the inquiry involved the service of subpoenas for documents on 22 virtual currency-related companies in August.  Although the announcement reiterated the NYDFS’s concern that “the cloak of anonymity provided by virtual currencies [may] help support dangerous criminal activity,” and made reference to the recent arrest of alleged Silk Road Operator Ross William Ulbricht, it also stated that “[v]irtual currencies may have a number of legitimate commercial purposes, including the facilitation of financial transactions.”  To protect the virtual currency industry’s long-term interest in legitimacy, therefore, the NYDFS has taken it upon itself to “put place appropriate guardrails that protect consumers, root out illegal activity, and safeguard our national security.”
Continue Reading New York State Department of Financial Services Announces Hearing on Proposed Virtual Currency Licenses

Riding the coattails of an August 6, 2013 federal court ruling that alleged Ponzi-schemer Trendon Shavers’ Bitcoin-based investment scheme constituted an investment contract, and therefore is a “security” under the federal securities laws, various federal and state lawmakers have aligned their attention to issues affecting the virtual currency market. Indeed, it now appears that Congress