Mar 06, 2018
In the last few weeks the Securities and Exchange Commission (SEC) has issued subpoenas to as many as 80 cryptocurrency companies. There is every indication that the SEC is not done issuing subpoenas, nor focusing on companies and individuals involved in commercial activity involving blockchain and cryptocurrency. The Commodities and Futures Trading Commission (CFTC) is also active in the blockchain space and pursuing investigations, as are state-level regulators and attorneys general. These agencies can pursue either criminal, administrative or civil actions, or a combination of any of them. So, what does this mean?
It is important to understand that the government may have been investigating long before they reach out to you or your company. The first you may hear about the investigation is a subpoena to the company, knocking on your door, or calling and asking to speak with you. In an extreme case, the government may execute a search warrant at the company’s offices.
What can your company do now to be prepared for receiving a subpoena or other government inquiry? Here are some dos and don’ts:
DO have a plan, and communicate it to all employees. The plan should include:
DO immediately consult an attorney with experience handling government investigations.
DON’T respond without consulting an attorney with experience handling government investigations, even if you think you haven’t done anything wrong. An experienced attorney will be a trusted bridge between you and the government agency. The attorney will able to negotiate the scope and timing of the response, review the information with a view to potential violations so you are prepared, and give you a road map of the process and set expectations.
DON’T provide any information to the government before you have consulted an attorney. Even if you receive a phone call, do not respond to questions from the government. Instead, let the government employee know you will contact them after consulting with an attorney.
DON’T provide false information. If you are unsure, wait until you are sure (and until you have an attorney) to respond.
DO preserve all relevant information. In consultation with your attorney, prepare a plan to preserve any information, in any format, on any device that may be related to the government inquiry. Your attorney will likely also advise you to issue a “hold notice” to all custodians of relevant information to instruct them on their obligation to preserve data.
DO dig up your insurance policies and be prepared to discuss with your attorney and your insurer whether the costs associated with responding to the subpoena will be covered under the policy.
At CKR Law, we have a team of seasoned attorneys with decades of experience representing companies and individuals in government investigations. For more information, reach out to your contact at CKR Law or any of the attorneys in the CKR White Collar Group at the information below: