As the home of Wall Street and the financial centre of the United States, New York has long been the place where the highest-profile and most sophisticated white-collar criminal cases in this country are prosecuted. Most such cases are prosecuted under federal law by the United States Attorney’s Offices for the Southern and Eastern Districts of New York (SDNY and EDNY, respectively), both of which are part of the US Department of Justice (DOJ). The SDNY, which has jurisdiction over Manhattan, Westchester and adjacent counties, is generally considered the nation’s leading office in the prosecution of securities fraud, including insider trading and related crimes. The EDNY, which has jurisdiction over Brooklyn, Queens, Staten Island and Long Island, has also brought numerous sophisticated white-collar cases, including cases involving defendants located across the United States and indeed the world. Both offices have aggressively sought to expand their reach, often using New York’s status as a banking centre, where securities are traded and global financial transactions are processed, as a jurisdictional hook to reach conduct far beyond the state’s borders. New York’s state law enforcement agencies have also become increasingly involved in prosecuting sophisticated white-collar crime cases, in particular the New York Attorney General’s Office (NYAG) and Manhattan District Attorney’s Office.

There have been a number of important developments in white-collar criminal enforcement in New York this year. Most notably, the SDNY and EDNY took significant steps to incentivise potentially culpable individuals to voluntarily come forward, report wrongdoing and co-operate with law enforcement in prosecuting others. In return for this assistance, new policies announced by the SDNY and EDNY promise non-prosecution agreements to qualifying individuals. One likely effect of these policies will be to put pressure on companies to redouble their own internal compliance efforts and expeditiously report fraud to the government under existing DOJ policies before their employees do so.

This year has also seen continued efforts by the SDNY and EDNY to push jurisdictional boundaries and charge defendants acting overseas. At the same time, both offices have been aggressively working to curtail the efforts of foreign actors to influence domestic affairs. This is a trend the firm expects to continue, as DOJ has made it clear that national security matters remain a priority, and that it will use the criminal laws – including those prohibiting bribery, money-laundering and fraud – to target improper foreign interference in the United States.

Finally, 2024 has been a year of continued investment by federal and state prosecutors in efforts to police the crypto-markets. Prosecutors have successfully used existing fraud and money-laundering statutes to obtain convictions of those alleged to have lied in relation to the marketing and sale of crypto-assets, as well as those accused of permitting the abuse of crypto exchanges to further criminal activity.

Incentivising Voluntary Self-Reporting of Corporate Misconduct

Beginning in 2016, initially in the context of the Foreign Corrupt Practices Act (FCPA), DOJ began to roll out programmes designed to encourage companies to self-report criminal conduct in return for leniency. By 2023, DOJ had expanded what is now known as its Corporate Enforcement Policy to reach beyond the FCPA and apply to corporate crime more generally. All DOJ components, including the SDNY and EDNY, now have policies that provide co-operation credit to companies that voluntarily self-report wrongdoing and work with the government to hold individuals accountable. In exchange for their voluntary self-disclosure, full co-operation and timely remediation (including the satisfaction of any financial penalties), prosecutors award corporations the presumption that the office will decline to pursue criminal charges against the corporation itself.

This year, the SDNY and EDNY took their incentive programmes a step further. In January 2024, the SDNY announced the launch of the Whistleblower Pilot Program focused on encouraging co-operation by individuals (rather than companies) who have been involved in white-collar criminal conduct and have information about the involvement of more culpable targets. DOJ announced a similar policy in April 2024, and the EDNY followed suit in September.

There are differences between the SDNY and EDNY programmes, but both target individuals who have information not previously known to law enforcement that can be used to prosecute more culpable perpetrators higher up the corporate chain. Notably, the government will not require an individual who has committed a crime under the circumstances set forth in the policy to plead guilty to felony charges in order to get credit for co-operating. Instead, qualifying participants in the programme will be given non-prosecution agreements, which typically provide that the government will bring no charges against the individual in return for his or her truthful testimony and co-operation. While both the SDNY and EDNY already award non-prosecution agreements to lower-level offenders in particularly sympathetic or compelling circumstances, these new policies reflect a broader willingness to use such agreements as a tool to ferret out information that might not otherwise come to light.

Notably, CEOs and CFOs are ineligible for protection under the SDNY’s programme, and the EDNY’s programme expressly excludes “the highest-ranking person” within the company “or the person who, regardless of title, exercises primary control over the operations of such organization”. The SDNY’s programme contains a number of other exceptions, including for “individuals who provide information regarding violations of the FCPA, or violations of federal or state campaign financing laws, federal patronage crimes, corruption of the electoral process, bribery of federal officials, federal tax offenses, or federal environmental crimes”. The EDNY’s programme seemingly has fewer exclusions.

Executives and employees involved in undisclosed wrongdoing will now have more reason to engage counsel and voluntarily approach the government, particularly where they fit squarely within the programmes’ parameters. Where there are multiple wrongdoers, the programmes may create a “race to disclose” dynamic where each participant in a crime with concerns about its eventual disclosure seeks to be the first to report it. However, the firm believes that the most significant impact is likely to be on companies that have received allegations of criminal conduct within their organisations. Under the current policies governing self-disclosure by corporations, a company must provide information not previously known to the government, and must do so “within a reasonably prompt time after the company becoming aware of the misconduct”, in order to receive full credit. The prospect of a culpable employee reporting the information first will push companies to disclose alleged wrongdoing to the government quickly, perhaps even before they have had an opportunity to conduct a robust internal investigation and ascertain the nature and extent of the potential misconduct for themselves.

Pursuing Foreign Corrupt Influences

Pursuing wrongdoers abroad has, for at least the last decade, been a growth area for both the SDNY and EDNY, reaching into foreign markets to regulate the conduct of US nationals operating on foreign soil as well as foreign nationals operating on foreign soil with a nexus to domestic markets.

That trend continues. For example, in February 2024, in a case in the EDNY, Javier Aguilar, a former Houston-based trader at an energy and commodities company, was convicted of violating the FCPA by paying bribes to foreign officials of an Ecuadorian state-owned oil company in exchange for their business. The company for which he had worked, Vitol, had previously admitted to bribing officials in December 2020 and had received a deferred prosecution agreement. Part of that resolution was an agreement to pay USD135 million in penalties.

Meanwhile, in October 2023, the SDNY secured a conviction of a London-based co-founder and chief investment officer of a UK-based hedge fund who was charged with artificially manipulating the US dollar to the South African rand exchange rate in order to trigger a USD20 million payment under a barrier options contract. Both the fund and the investment officer, Neil Phillips, were registered with the US Commodity Futures Trading Commission. Phillips had directed the trades through Bloomberg chat messages that passed through New York.

During the last year, the EDNY and SDNY have signalled an increasing focus on cases involving matters of national security. While that certainly includes the crimes one typically associates with national security concerns – such as sanctions, hacking and money laundering – it also encompasses efforts by foreign actors to influence US affairs through bribery and fraud.

On 16 July 2024, the SDNY secured the conviction of then-US Senator Robert Menendez, former chairperson of the Senate Foreign Relations Committee, for accepting bribes in exchange for his efforts to improperly influence other US government officials and for providing sensitive non-public US government information to Egyptian officials, among other efforts to secretly aid the government of Egypt.

On the same day, Sue Mi Terry, then a senior fellow at the Council on Foreign Relations and a former Central Intelligence Agency analyst, was arrested on charges filed by the SDNY of acting as an unregistered foreign agent on behalf of the government of South Korea.

On 3 September 2024, the EDNY unsealed an indictment charging a former New York state government employee, Linda Sun, with acting as an undisclosed agent of the Chinese government, while her husband, Christopher Hu, helped facilitate a scheme to launder millions of dollars in kickbacks. According to the government, Sun engaged in numerous political activities in the interests of the People’s Republic of China and the Chinese Communist Party, including, by way of example, “blocking representatives of the Taiwanese government from having access to high-level New York State officers” and “changing high-level New York State officers’ messaging regarding issues of importance to the PRC and the CCP”.

Most recently, after a year-long investigation, the SDNY charged New York City Mayor, Eric Adams, with bribery and fraud in connection with alleged efforts to solicit foreign contributions to his 2021 mayoral election and 2025 re-election campaigns. The indictment alleges that since as early as 2018, Adams improperly sought and accepted campaign contributions and other benefits originating from Turkish nationals, including one “senior official in the Turkish diplomatic establishment”. Adams is charged with wire fraud based on his obtaining New York state “matching funds” under false pretences and with violating federal laws designed to prevent foreign influence on US elections.

Regulating Cryptocurrency Markets

Finally, both New York federal and state law enforcement offices have stepped up their efforts to prosecute crimes involving cryptocurrencies. Recent enforcement efforts reflect a continued focus on prosecuting traditional fraud by those transacting in cryptocurrencies, as well as efforts aimed at regulating the cryptocurrency platforms themselves.

On 6 December 2023, the EDNY and DOJ’s National Cryptocurrency Enforcement Team jointly announced that the founder and majority owner of the cryptocurrency exchange, Bitzlato, a Hong Kong-registered cryptocurrency exchange, was entering a guilty plea to unlicensed money transmitting. On account of deliberately lax protocols, the exchange had become a “haven for criminal proceeds and funds intended for use in criminal activity”, servicing darknet marketplaces through which narcotics, stolen financial information and money laundering services were being transacted. As part of his plea agreement, the defendant agreed to dissolve the exchange.

Similarly, on 26 March 2024, the SDNY unveiled charges against the global cryptocurrency exchange KuCoin, and two of its founders, for conspiring to operate an unlicensed money-transmitting business and conspiring to violate the Bank Secrecy Act based on a failure to maintain an adequate anti money laundering programme, and for failing to have sufficient identification procedures for customers and file suspicious activity reports.

As SDNY US Attorney Damian Williams explained in announcing the charges: “In failing to implement even basic anti-money laundering policies, the defendants allowed KuCoin to operate in the shadows of the financial markets and be used as a haven for illicit money laundering, with KuCoin receiving over USD5 billion and sending over USD4 billion of suspicious and criminal funds. Crypto exchanges like KuCoin cannot have it both ways. Today’s indictment should send a clear message to other crypto exchanges: if you plan to serve US customers, you must follow US law, plain and simple”.

In April 2024, the SDNY, the Internal Revenue Service (IRS) and the Federal Bureau of Investigation (FBI) announced the unsealing of an indictment charging the founders of Samourai Wallet with conspiracy to commit money laundering based on the individuals’ development, marketing and operation of a cryptocurrency mixer (which commingles customer funds to reduce transaction tracing) that allegedly engaged in over USD2 billion in illicit transactions and facilitated transactions from the dark web and a spear phishing scheme.

The charges against Bitzlato, KuCoin and Samourai Wallet reflect the SDNY’s and EDNY’s focus on policing the infrastructure through which cryptocurrency transactions take place. The firm expects both offices to continue to leverage the money laundering and related statutes to bring these cases, which, together with the efforts of other regulators, have begun to bring the crypto marketplace closer in line with traditional banking practices.

Meanwhile, both offices also continue their efforts to root out what they perceive to be classic fraud schemes, albeit perpetrated in a new context.

For example, on 31 October 2023, a federal grand jury in the EDNY returned an indictment charging the co-founders of digital assets company, SafeMoon, with conspiracy to commit securities fraud, wire fraud and money laundering. Defendants were alleged to have made misrepresentations about the security of investors’ deposits, claiming they were “locked” and inaccessible to investors. The defendants are alleged to have then fraudulently diverted and misappropriated millions of dollars’ worth of those purportedly “locked” assets for their own personal benefit. As the press release announcing the charges succinctly notes, “although this fraud scheme may be complex, the end result is simple—theft”.

Signalling that the office would continue to watch this space closely, EDNY US Attorney Breon Peace commented when announcing the charges against SafeMoon’s co-founders: “As fraudsters increasingly use digital assets to mislead investors and misappropriate funds, our Office will be at the forefront of pursuing them and their ill-gotten gains. We will continue our focus in the digital asset space and bring those who defraud investors in this area to justice”.

The EDNY made good on that promise shortly thereafter. On 19 January 2024, the EDNY announced charges against Horst Jicha, a German national accused of orchestrating a multilevel marketing scheme as the CEO of an international crypto investment platform, USI Tech. The company is alleged to have advertised the crypto investment platform as a way to make crypto investing simple and accessible for the “average retail investor”, guaranteeing returns. The company purportedly paid existing investors using funds it collected from new investors – a classic “Ponzi” scheme. There were limits, however, on how much an investor could transfer from their supposed earnings to their own digital wallets. Ultimately, facing regulatory scrutiny, USI Tech ceased all US operations, blaming investors for misconduct on the platform and claiming that it was barred from making distributions in order to prevent further abuse. Jicha then allegedly transferred assets from the platform to digital wallets under his control.

On 14 April 2024, a jury in the SDNY convicted Avraham Eisenberg of commodities fraud, commodities market manipulation and wire fraud based on trades he placed to manipulate the price of certain futures contracts on the Mango Markets exchange. By inflating the price of these future contracts, Eisenberg was able to borrow and withdraw cryptocurrency based on the value of his assets on the platform. Due to the artificial inflation of the price of the future contracts, he was able to obtain USD110 million in cryptocurrency, which the government alleged he never intended to repay. The SDNY called this prosecution “ground-breaking” as the “first-ever cryptocurrency open-market manipulation case”.

Shortly thereafter, in May 2024, the SDNY, together with the IRS, unsealed an indictment charging two brothers with allegedly exploiting the Ethereum blockchain to gain access to pending transactions to obtain USD25 million within the span of 12 seconds. In a press release announcing the indictment, the SDNY US Attorney referred to the scheme as “novel” and the allegations as “never before been charged”.

The state enforcement arms are similarly keeping a close watch on the cryptocurrency industry.

The New York State Attorney General (NYAG) has a powerful weapon in this regard: NY General Business Law Article 24-A, more commonly known as the Martin Act. The Martin Act is a decades-old statute, with both civil and criminal provisions, authorising the NYAG to investigate and prosecute fraud in the securities and commodities markets. In the early 2000s, the NYAG breathed new life into the Martin Act by using it to bring cases against Wall Street investment banks.

More recently, the NYAG – arguing that the crypto-assets at issue are either securities or commodities under the statute – has used it to file suit against several crypto companies, including KuCoin, among others.

Very recently, in August 2024, the Manhattan District Attorney announced the creation of a Cyber Crime Bureau (the “Bureau”), which “utilizes complex investigative techniques and focuses on technically sophisticated and other ‘cutting edge’ crimes which involve recent technological innovation and trends”. District Attorney Bragg highlighted the Bureau’s investigation and recent indictment of a defendant for allegedly operating a sham cryptocurrency asset recovery business, Coin Dispute Network.

The firm expects all of the trends highlighted above to continue into 2025. Moreover, increasing overlap between them is expected. The rapid growth of crypto is a worldwide phenomenon that, like the technologies that came before it, links together markets, nations and people. As prosecutors in New York pour resources into regulating this space, they will inevitably spawn investigations and bring cases that span the globe. And as foreign governments, companies, and individuals seek to use cryptocurrencies to conceal or facilitate wrongdoing in the United States, they will of course attract the attention of New York law enforcement, which remains the chief policeman of the financial markets. The year ahead will also likely yield evidence of whether the new voluntary-disclosure programmes announced by the SDNY and EDNY are achieving their desired effect, or whether further evolution of the programmes is necessary to adequately incentivise would-be whistle-blowers.