- Verizon Cooperates with DOJ related to Cybersecurity Allegations
- Justice Department Demonstrates its Focus on Part C Fraud with Martin’s Point $22.5 M Settlement
- DOJ, BIS and OFAC Issue Tri-Seal Compliance Note
- Booz Allen Pays $377 M to Settle Improper Indirect Cost Allegations
- NextGen’s $31 M Settlement of an Alleged False Certification and a Kickback Violation
- Things Just Got Interesting: A Disclosure, A Lawsuit and A False Claims Act Settlement
- Genotox resolves AKS parallel investigation with the DOJ
- Self-Disclose to Avoid Self-Sabotage: Clarifying DOJ’s Criminal Corporate Self-Disclosure Policy for US Attorney Offices
- With Recent Enforcement Action, DOJ and FTC Join the FCC in Targeting the Use of Ringless Voicemails
- DePuy Agrees to Pay $9.75 Million in FCA Kickback Investigation
- False Claims Act
- Department of Justice (DOJ)
- Anti-Kickback Statute
- Financial Institutions
- Corporate Criminal Enforcement
- White Collar & Investigations
- Procurement Fraud
- Consumer Protection
- Cooperation Credit
- Medicare Fraud
- Bank Exam Privilege
- Paycheck Protection Program
- Stark Law
White Collar + Fraud + Investigations + Compliance
On Tuesday, the Federal Reserve, FDIC and the Office of the Comptroller of the Currency (the “OCC”) issued a Joint Statement on Crypto-Asset Risks to Banking Organizations. This Statement should signal to banking institutions that crypto-assets are about to receive a lot more attention from prudential regulators. In particular, these institutions should likely expect more targeted reviews related to cryptocurrency assets and how they impact the safety and soundness of those institutions.
It is clear that this Joint Statement was issued in response to persistent calls for more regulatory oversight over crypto-assets, and recent events involving the bankruptcies of key crypto industry players like FTX, Celsius, and BlockFi. In particular, the Joint Statement notes that the volatility of the past year “highlight[s] a number of key risks associated with crypto-assets and crypto-asset participants that banking organizations should be aware of” including, (i) inaccurate or misleading statements by crypto-asset companies; (ii) risk management and governance practices “exhibiting a lack of maturity and robustness” and (iii) heightened risks associated with the lack of oversight, among other things. In other words, these prudential regulators cite to the lack of controls and risk governance in the crypto industry as reasons that financial institutions should be mindful of the specific risks associated with the crypto-asset sector.
These prudential regulators assert that certain risks associated with the sector “cannot be mitigated or controlled” and, as such, they are carefully reviewing proposals from banking organizations to engage in activities that involve crypto-assets. Again, institutions should expect increased scrutiny related to crypto assets and crypto-related activities that would expose those institutions to additional risks.
Also, given this increased focus on crypto assets by prudential regulators, one should also likely expect increased enforcement activity by the Department of Justice and U.S. Securities and Exchange Commission related to crypto-assets as it relates to financial institutions. Indeed, the SEC already announced in May 2022 that it was doubling its Crypto-Assets and Cyber Unit. Given the life cycle of fraud investigations and enforcement, the next 2-4 years will likely yield interesting results as it relates to enforcement in this space. In short, stay tuned!
A link to the Joint Statement is provided here.