On October 11, 2022, the U.S. Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) and Financial Crimes Enforcement Network (“FinCEN”) announced related enforcement settlements with Bittrex, Inc., a U.S.-based digital asset exchange and hosted wallet services company (the “Company”), to settle violations of U.S. sanctions and the Bank Secrecy Act (“BSA”) and related regulations, respectively.[1] The OFAC Settlement, the largest of OFAC’s digital asset-related enforcement actions to date, and the FinCEN Consent Order collectively result in the Company paying a civil penalty of approximately $30 million. Following OFAC’s release of its “Sanctions Compliance Guidance for the Virtual Currency Industry” (which we wrote about here)[2] and recent revelations regarding prosecution by the U.S. Department of Justice of digital asset-related U.S. sanctions violations (which we wrote about here),[3] this joint OFAC-FinCEN enforcement action illustrates the U.S. government’s continued focus on the digital asset industry’s compliance with U.S. sanctions and the potentially significant penalties parties can face for U.S. sanctions and BSA violations.
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The United States Tightens China-Related Export Controls on Advanced Computing and Semiconductor Manufacturing Items
On October 7, 2022, the U.S. Department of Commerce, Bureau of Industry and Security (“BIS”) announced an interim final rule and a final rule imposing new export controls designed to restrict China’s ability to obtain advanced computing chips, develop and maintain supercomputers, and manufacture advanced semiconductors. According to BIS, the rules, which reflected consultation with close allies and partners, as well as private industry, and are being issued pursuant to the Export Control Reform Act of 2018, are part of the U.S. government’s ongoing review of export control policies toward China and follow several other regulatory and enforcement actions announced earlier this year (e.g., implementing multilateral export controls on advanced semiconductor and gas turbine engine technologies, on which we wrote about here).
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President Biden Issues CFIUS-Related Executive Order Regarding Evolving National Security Landscape
On September 15, 2022, President Biden issued an Executive Order that provides direction to the Committee on Foreign Investment in the United States (“CFIUS”) regarding some of the factors it should consider when evaluating the national security risks posed by transactions within the jurisdiction of CFIUS.[1] Although, in many ways, the Executive Order simply codifies the priorities and areas of interest on which people familiar with CFIUS understand CFIUS is focused, the Executive Order puts market participants on clear notice that CFIUS will scrutinize transactions that implicate such priorities and areas of interest.
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U.S. Treasury Department Issues Preliminary Guidance on Russian Oil Price Cap and Services Ban
On September 9, 2022, the U.S. Department of the Treasury issued preliminary guidance (Preliminary Guidance) providing the initial outline of a long-anticipated price cap on Russian-origin crude oil and petroleum products (Price Cap), taking effect December 5, 2022 and February 5, 2023, respectively.[1] The Price Cap is expected to be implemented by “a coalition of countries including the G7 and the EU” and follows an earlier statement of intent issued September 2, 2022 by G7 finance ministers.[2]
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3 Foreign Investment Issues Affecting Cross-Border Deals
Cleary Gottlieb partner Chase Kaniecki and associate Will Dawley co-authored an article titled, “3 Foreign Investment Issues Affecting Cross-Border Deals,” which was published by Law360.
In the article they provide a summary of the recent developments in the FDI review regimes in the EU and the U.K. and highlight three of the
New Export Controls on Semiconductor and Gas Turbine Engine Technologies Expand CFIUS Mandatory Notification Requirements
The U.S. Department of Commerce, Bureau of Industry and Security (“BIS”) recently published an interim final rule imposing export controls on additional technologies that satisfy the criteria pertaining to emerging and foundational technologies under the Export Control Reform Act of 2018 (“ECRA”).[1]
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CFIUS 2021 Annual Report – Five Key Takeaways
The Committee on Foreign Investment in the United States (CFIUS) recently released its 2021 Annual Report, which provides important information and statistics about covered transactions reviewed by CFIUS in 2021 and the underlying implications for foreign investors.[1]
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Global Merger Control and Foreign Direct Investment Considerations Associated with Cross-Border Transactions
Recent developments regarding global competition enforcement and foreign direct investment, or FDI, review regimes have created uncertainty for cross-border transactions. Specifically, global merger control authorities have become increasingly aggressive in “calling in” transactions under so-called “voluntary” regimes and a number of FDI review regimes recently have been established or expanded. These developments have resulted in
U.S. Federal Judge Finds Probable Cause for Conspiracy to Violate U.S. Sanctions and to Defraud the United States in First Published Opinion Discussing U.S. Sanctions Violations Involving Use of Cryptocurrency
In a recent opinion, U.S. Magistrate Judge Zia M. Faruqui of the U.S. District Court for the District of Columbia held that there is probable cause to find that a U.S. citizen-defendant violated U.S. sanctions by funneling cryptocurrency to a payments platform that the defendant operated in a “comprehensively sanctioned country.”
Continue Reading U.S. Federal Judge Finds Probable Cause for Conspiracy to Violate U.S. Sanctions and to Defraud the United States in First Published Opinion Discussing U.S. Sanctions Violations Involving Use of Cryptocurrency
U.S. Government Reportedly Taking Steps Toward Limited Easing of Venezuela-Related Sanctions
The U.S. Department of the Treasury, Office of Foreign Assets Control (“OFAC”) is reportedly taking steps toward a limited easing of certain sanctions targeting Venezuela. If the public reporting is accurate, these limited concessions are being made by the Biden administration in connection with the resumption of negotiations between the Maduro regime and Venezuelan opposition leaders regarding the political situation and future elections in Venezuela. As of the date of this blog post, no official U.S. government announcements regarding such measures have been made.
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