Dan Roeser, a litigator in Goodwin Procter’s New York office, said the Tether case wasn’t a broad indictment of fintech, but some clients don’t understand that. They tend instead to be more focused on the overall activity level of regulators rather than the outcome of any particular case, he said.
Kayvan Sadeghi, an attorney at Schiff Hardin LLP in New York, said much the same. Even though he’s been alerting clients to activity by the New York attorney general’s office for years, he said, the Tether settlement isn’t as significant as it sounds considering Tether’s market value of $40 billion.
New York unveiled a separate lawsuit against Coinseed Inc. last month over allegations that its initial coin offering should have been registered as securities and subject to broker-dealer registration requirements.
“Unregulated and fraudulent virtual currency entities, no matter how big or small, will no longer be tolerated in New York,” state Attorney General Letitia James said in a Feb. 17 statement regarding Coinseed. The case is pending, but James made clear that she intends to use state anti-fraud laws to prosecute cryptocurrency businesses over misconduct.
Looking to other states
Sadeghi said that even before these enforcement actions, some clients tried to avoid New York due to the requirement for most businesses dealing in cryptocurrency to register and obtain a BitLicense from the Department of Financial Services. Merchants and consumers using it as a medium of exchange are exempt, but issuers, administrators and exchange services for virtual currency must register.