Florida OFR Claims Marijuana and Virtual Currency Are “Emerging Threats”

Florida Office of Financial Regulation recently released a consumer publication, Fast Facts, which claimed that medical marijuana and virtual currency (bitcoins) were “emerging threats” in terms of investments.fast

The pamphlet does not state the factual or anecdotal basis for those statements.

The Fast Facts pamphlet is here.  See page 9.


Christopher Hopkins Speaks At Miami Bitcoin – Regulatory Panel (TNABC)

The North American Bitcoin Conference was held in Miami Beach this weekend and included a discussion of regulatory issues among attorneys Jacob Farber, Kathryn Haun, Christopher Hopkins, Andrew Ittleman, and Marco Santori as well as non-lawyers Perianne Boring and Australian Senator Sam Dastyari.IMG_9229

One topic that was stressed was that government regulation is slow while private lawsuits are coming much faster.  Those suits can help clean up the industry by targeting fraudulent practices and sending a warning signal that the virtual currency market is not a free-for-all open to dishonest practices.

The Inside Bitcoins article, #BTCMiami: Regulation Panel Predicts New State Law Imminent — and “Look Out for Lawsuits” is here.

Coindesk has coverage of both days of the conference here and here.

Videos of the sessions are forthcoming and will be linked (here) when available.

Can Your Client Legally Fly a Drone?

Drones were apparently the popular holiday gift last month — to the point that the FAA issued special guidance for new flyers.drones

Can Your Client Legally Fly a Drone?” is from the January 2015 Palm Beach Bar Bulletin and explains the trial ruling in the Pirker case and some of the basics about recreational and commercial drones.

While the Pirker appellate decision came out just prior to publication, this article is one of the few legal analysis pieces which points out how frequently Pirker is mis-applied and misunderstood.

The article provides guidance beyond fliers in Palm Beach County or Florida.

Coming up: next month’s article on collecting evidence via drone.

Florida Virtual Currency “Fibonacci” Lawsuit

As reported on Coindesk, we have filed suit on behalf of two defrauded purchasers against the “Fibonacci” manufacturing and mining organization (see Coindesk.com, “Florida Group Faces Fraud Charges for Alleged Altcoin Pump and Dump,” December 17, 2014).  Bitcoin-btcbible

You can read their excellent coverage here.

A copy of the lawsuit is here.

This is the second suit we have brought against defendants involved in alleged virtual currency mining fraud (see Coindesk’s coverage of our Lab Rats suit, here).

Legal Ethics – Check Your iOS 8 Privacy Settings

Lawyers (and other professionals) have ethical obligations to reasonably know about the technology they use — and ensure that communications are confidential and protected.iOS-8-logo-mockup-001

This article from the December 2014 Palm Beach Bar Journal explains a dozen privacy settings for your iPhone or iPad which should increase your security.

How Jurors and Lawyers Use Social Media and Technology


Lawyers are ethically required to stay competent with emerging technology that impacts their practice.  You need confidential communications.  You need to know how to research.fb

This article, How Jurors and Lawyers Use Social Media and Technology, discusses how the average juror is using the internet AND explains what your co-workers and colleagues are doing.

For example, did you know that Microsoft Vista is the most frequently used Windows platform for Florida lawyers?

Or that the average viewer spends 9 minutes on a pornography website?

Check out the article, from the November 2014 Palm Beach Bar Bulletin, here.

Florida Lawyer’s Guide to Marijuana Laws

Floridians will vote this November on Amendment 2, relating to Use of Marijuana for Certain Medical Conditions.  floridamed

Just this past June, Governor Scott signed the Compassionate Medical Cannabis Act into law.

How does the interplay between state and federal drug laws work?

This article (here) from the October 2014 Palm Beach Bar Bulletin will explain the Florida Supreme Court advisory opinion, Florida drug paraphernalia laws, cannabis laws, Controlled Substance Act, Cole Memos, FinCEN guidance, and outside counsel’s letter to the University of Florida regarding marijuana research.

FTC v. Butterfly Labs: Complaint and Response

The Federal Trade Commission (FTC) filed suit against bitcoin-mining hardware manufacturer, BF Labs, Inc. d/b/a Butterfly Labs, on September 15, 2014 alleging misrepresentations and deceptive omissions regarding the marketing and manufacturing of the BitForce and Monarch mining machines.  Among other relief, the suit seeks temporary and permanent injunctions as well as disgorgement of money.

A copy of the suit is here.  BUTTERFLY-ORANGE-969x1024

The Complaint alleges that “as of September 2013, [Butterfly] had failed to ship mining machines to more than 20,000 customers who had paid for the equipment in full.”  Butterfly allegedly posted online that it had shipped all orders for BitForce machines by November 2013 however the FTC claimed that consumers “continued to file complaints about not receiving their prepaid BitForce mining machine.”

As for Monarch machines, the Complaint alleged, ‘[a]s of August 2014, [Butterfly] had yet to ship a single Monarch machine.”

In this type of ex parte action, a temporary order was issued and a local lawyer was appointed as receiver for Butterly.

Butterfly filed its Response arguing that the temporary restraining order was “unwarranted” and that the FTC was harming consumers by its actions.  While admitting that Butterly had “unquestionably experienced growing pains,” they argue that, among other reasons, it was the competitive mining market and slow PC component delays which contributed to the situation — noting that “almost every other equipment manufacturer has been attacked: HashFast… Cointerra… and KnC Miner…”

Butterfly’s Response reveals that it was sued in a putative class action (which is in the discovery phase) and that, separately, Butterfly was investigated by the local district attorney.

Butterfly claims that it handed over more than $11 million dollars in bitcoin to its receiver and is cooperating.  It claims that it has a “clear and conspicuous” “two months or longer” warning.  As for refunds, Butterfly avers that it has refunded money for all pre-Monarch machines; shipped or refunded every Monarch order between August – November 2013; and is processing returns for more recent purchases.

The Response is here.

A hearing is set for September 24.

US v. Faiella and Shrem – Ruling on Bitcoin as “Money” or “Funds”

It has been widely reported that bitcoin entrepreneur Charlie Shrem is going to agree to a plea deal.  Bitcoin-btcbible

There has been less coverage, however, regarding the Judge’s August 18, 2014 Order.

This Order is important to the US v. Faiella and Shrem case because the defendants lost their argument that bitcoin did not fit money laundering (AML) and bank security laws (BSA).  Likely, at that point, the defendants chose to strike a deal.

This Order is perhaps more important since it is really the first serious judicial opinion on bitcoin.  In other words, this may be the first true legal precedent regarding bitcoin regulation.  That said, it is going to be generally viewed persuasive legal authority since this is a district court order and not yet a circuit appellate opinion.  Moreover, factual situations differing from the Silk Road website may lead to differing outcomes.

As we’ve addressed before, the SEC v. Voorhees matter was really not a bitcoin case.

Likewise, while the SEC v Shavers case gets bandied about as the first bitcoin case, the order in that matter was only intended to superficially touch upon bitcoin.  It is not really legal precedent given the nature of the order (discussed here).

In the Faiella case, District Judge Rakoff held that bitcoin was “money” or “funds” and that operating a bitcoin exchange such as Silk Road was money transmitting.

First, the Court held that bitcoin fit the statutory definition of “money” or “funds” because of its ordinary use (Judge Rakoff eschewed the technical Black’s Law for the ordinary Merriam-Webster dictionary).  According to the Court, it fit the definition because “bitcoin can be easily purchased in exchange for ordinary currency, acts as a denomination of value, and is used to conduct financial transactions.”  Admittedly, the Court cites to the Shavers order but, again, that case wins the prize for being first-on-the-scene but that order remains weak precedent.  Even if there were some question as to definitions, Judge Rakoff assessed that the legislative history was supportive of his conclusion and that the statute was designed with flexibility in mind to “keep pace with such evolving threats.”

Second, the Court held that Silk Road was “transmitting money” despite the defense that the site was not selling transmitting services for profit.  The Court held that there was a transfer because the customers sent cash to Faiella, he exchanged them for bitcoin, and then he put the virtual currency in the customers’ Silk Road account, which was in third party hands (“for Silk Road customers did not have full control over the bitcoins transferred into their accounts”).  In conclusion, “the Court finds that, in sending his customers’ funds to Silk Road, Faiella ‘transferred’ them to others for a profit.”  The Order is short (6 pages) and does not provide a lot of the facts of the case; to that end, a website which is set up differently than Silk Road may have better factual arguments (both as to “transfer” and “for profit” elements).

Faiella was determined to be a “money transmitter” under the statute based upon FinCEN’s prior guidance that an administrator or exchanger of virtual currency is a money service business (MSB) and that the statutory exemptions did not apply.

Again, the Order is here.  The docket, at least as of August 28, 2014, is here.


Can a Florida Lawyer Advise a Client About Medical Marijuana?


This November, Florida voters will consider whether to legalize medical marijuana.  If so, Florida would join several states which have allowed recreational and/or medical cannabis cultivation, distribution, and use.floridamed

But it remains illegal under federal law.  Can lawyers advise their clients about a marijuana business which is legal under state law but barred by federal law?

The article, “Can a Florida Lawyer Advise a Client About Medical Marijuana?,” may provide the answer.  Published by the Palm Beach County Bar Association in its September 2014 Bar Bulletin.

For general information on Florida marijuana laws and the upcoming vote, see this post here.

For a recent (July 31, 2014) summary of the draft rules to implement the Compassionate Medical Cannabis Act, see here.

Akerman LLP has a Regulated Substances Task Force which you can find here.

Technology and iOS Apps for Mediators

Thanks to the Florida Dispute Resolution Center for inviting me to speak at the 22nd Annual Conference this year in Orlando.N

The materials from the presentation are here.

The Adobe Voice presentation about mediation is here.

One Year After Snowden: How Safe Are Your Calls and Emails?

Back in April 2014, I spoke to the Palm Beach Chamber of Commerce about the security of emails and phone communications in the business world (materials are here).large_woman_tin_foil_hat

This article, “One Year After Snowden: How Safe Are Your Calls and Emails?,” summarizes the key Snowden disclosures over the last year and provides some “best practices” for lawyers and business people.

Originally published in the July/August Palm Beach County Bar Association’s Bulletin.

Getting to Know Florida Medical Marijuana / Cannabis Laws

A Google Trend report shows that “Florida Medical Marijuana” has generated massive attention since 2013.  floridamed

I attended a recent Florida Cannabis Coalition meeting and, while the speakers were good, the attendees seemed uneducated (case in point, people literally got up and left when they heard about the $150,000 application fee and $5 millon bond).

As a baseline, to become educated on these developing legal issues in Florida, be aware of:

1.  Florida Senate Bill 1030 “Charlotte’s Web” (signed by Gov. Scott): here

2.  Florida Senate Bill 1700 Marijuana Indentity Protection Act (signed by Gov. Scott): here

3.  Amendment 2: here

4.  Cole Memo (August 2013): here

5.  Cole Memo 2 (Feb 2014): here

6.  Channel 5 WPTV-WPB: “Hundreds of entrepreneuers gather in Boca Raton tolearn how to make money from medical marijuana”: here.  (I’m there around 1:01 m into the video)

Deleting versus Deactiving Facebook

With the revelation that Facebook is tracking users across the web, even if you log off, I have deleted my Facebook account.  facebook1

Yes, deleted.  Not just deactivated.

You can “deactivate” your Facebook account and it disappears from sight but it is still there in the Facebook vault, ready for you to re-activate.

So if you want to test your separation from Facebook, this is the step (instructions).

For something hopefully more permanent, you can delete your account.

Mashable ran a good step-by-step to download your data, disconnect your apps, and locate the delete-account-page (“How to Completely Delete Facebook From Your Life”).

Mashable’s article is here.  And the elusive delete-your-Facebook-account page is here.

In Re Erik T. Voorhees (settlement): Not Really a Bitcoin Case

The hot bitcoin-related story involves the settlement between the Securities and Exchange Commission (SEC) and bitcoin-advocate, Erik T. Voorhees.

This case involves bitcoin but is not about bitcoin.  Stated differently, this case is not an attack on bitcoin.  It simply involves charges of a crime unrelated to the virtual currency itself.

Specifically, Voorhees was charged with offering securities (stock) in two different companies which were not registered with the SEC.  There were other associated alleged violations (e.g., not filing a prospectus).

Bitcoin is involved, but is not the focus of this case, only because Voorhees is a bitcoin-advocate, the stocks were sold in bitcoin, and the two businesses used bitcoin.

There is nothing in the order/settlement which criticizes or criminalizes bitcoin.

The settlement means that Voorhees disgorges $15,000 (plus interest) and pays a $35,000 civil penalty.  Stories (such as this one) that he is paying a $50,000 “fine” are not defining the terms correctly.

The settlement / order instituting cease and desist proceedings is here.

The SEC’s press release is here.  Their prior May 7, 2014 “Investor Alert: Bitcoin and other Virtual Currency-Related Investments” is here.

Voorhees’ post on Reddit about the settlement is here.