USA – NEW YORK Trends and Developments Contributed by: Jilan J. Kamal, Michelle Ben-David and Laszlo Herwitz, Herbert Smith Freehills Kramer
and conspiracy to commit money laundering. Medje - dovic allegedly exploited vulnerabilities in the auto - mated smart contracts used by the company Kyber - Swap to “borrow” hundreds of millions of dollars’ worth of digital tokens. He is accused of tricking the KyberSwap programme into calculating the value of his investments at artificially high prices before quickly withdrawing the funds (totalling more than USD65 mil - lion) and repaying the initial loans while reaping mas - sive profits. This prosecution was announced before the updated memorandum from the DOJ but is con - sistent with the Trump administration’s new focus on individuals who use cryptocurrency ventures as part of a wilful scheme to defraud. Federal prosecutors in the SDNY have also demon - strated a commitment to continuing already-existing cryptocurrency enforcement cases, particularly those that overlap with the DOJ’s stated priorities in the are - as of money laundering and combatting of transna - tional criminal organisations. In August 2025, Roman Storm, the co-founder of cryptocurrency mixing com - pany Tornado Cash, was found guilty of one count of conspiring to operate an unlicensed money transmit - ting business. At trial, prosecutors alleged that Storm, along with his co-founder, knowingly allowed Tornado Cash to process untraceable cryptocurrency transac - tions, thus helping to launder more than USD1 billion in tainted funds for criminals, including North Korean hackers. That same month, Keonne Rodriguez and William Lonergan Hill, the CEO and CTO of crypto - currency mixer Samourai Wallet, pled guilty in the SDNY to one count each of “conspiracy to operate a money transmitting business knowing that the busi - ness transmitted crime proceeds.” The guilty pleas, under which the defendants face up to five years in prison and forfeitures totalling approximately USD237 million, come after both were indicted on charges that they built and actively marketed Samourai Wallet as a vehicle to conceal criminal activity, causing the com - pany to process over USD2 billion in unlawful transac - tions and launder more than USD100 million for online drug markets and cybercriminals. As federal prosecutors decline to “regulate through enforcement”, the New York Attorney General and the New York State Department of Financial Services, the agency responsible for regulating financial services
and products under New York State law, appear primed to fill the gaps left by federal law enforcement. In December 2024, DFS Superintendent Adrienne Harris told the Financial Times that the expected rollback of federal cryptocurrency regulations would cause an increase in the volume of cryptocurrency cases brought by her office, stating that a decrease in federal enforcement would likely, “increase the volume of consumer protection cases that we may bring on the enforcement side.” While Harris was quick to note that the DFS was not trying to take a hostile approach to cryptocurrency in New York State, she explicitly noted that her office would endeavour to “fill those gaps [created by lessened federal enforcement]… as appropriate.” In May 2025, Harris reiterated DFS’s desire to be at the forefront of cryptocurrency regulation at the Compli - ance Week National conference, saying, “We’re going to keep running our drill.” In August 2025, the DFS announced that it had reached a USD48.5 million set - tlement with blockchain company Paxos, stemming from allegations that it had failed to detect money laundering problems by its former partner Binance (the company against which the SEC dropped its suit). Specifically, the DFS alleged that Paxos failed to implement robust anti-money laundering and transac - tion monitoring programmes, constituting a breach of a 2020 Letter Agreement it had signed with the DFS concerning its relationship with Binance. Meanwhile, the NYAG’s office, led by Letitia James, has continued its aggressive approach to cryptocur - rency enforcement at both the corporate and individ - ual levels, including through using her authority under New York State’s powerful Martin Act, which prohibits individuals and companies from making material mis - representations in the public offerings of securities. In March 2025, the New York Attorney General’s Office announced that it had reached a USD200 million set - tlement with Galaxy Digital Holdings to resolve alle - gations that it had acquired the digital asset Luna at discounted rates and then marketed it aggressively to consumers. When the price of Luna crashed, Galaxy had already sold off the majority of its holdings, gener - ating hundreds of millions in profit. In addition to cases under the Martin Act, the NYAG’s Office also appears
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