NYAG Urges NY Residents to Report Cryptocurrency Losses and Misconduct
Commentary by Stephen Juris
New York Attorney General Leticia James urged any New York resident affected by the recent crash in the cryptocurrency market to file a complaint with the New York Office of the Attorney General ("OAG").
Attorney General James stated that due to the recent crash, many cryptocurrency companies (i) froze customer withdrawals, (ii) laid off a large number of staff or (iii) filed for bankruptcy. As a result, many consumers have suffered significant losses and are unable to withdraw funds from cryptocurrency wallets.
Specifically, Attorney General James requested that investors file a complaint if they (i) have been locked out of their accounts, (ii) are unable to access their investments or (iii) were deceived about the structure and potential for returns on their cryptocurrency investments. Additionally, the Attorney General urged cryptocurrency industry employees to anonymously file whistleblower complaints if they believe they have witnessed misconduct by their employers. Attorney General James also urged victims of fraud or other misconduct to file complaints with OAG.
Commentary
This is a helpful reminder that there are other major regulatory and law enforcement players in the mix here besides the SEC, CFTC and DOJ. And unlike many federal authorities, OAG has extremely broad and amorphous enforcement tools at its disposal that do not distinguish between, and among, types of commodities, securities and currencies. Under the Martin Act, OAG has civil and criminal enforcement powers with respect to all manner of securities or commodities transactions, regardless of their type. Under New York Executive Law 63(12), OAG likewise has the power to enjoin and seek remedies for persistent fraudulent acts and fraudulent schemes regardless of the industries or market sectors concerned. Fine distinctions that might otherwise be relevant in some regulatory contexts are unlikely to drive litigation or enforcement outcomes where OAG is able to assert jurisdiction.