USA v. Virgil Griffith: What we all know (and Don’t) within the Bombshell Crypto Sanctions Case

USA v. Virgil Griffith: What we all know (and Don’t) within the Bombshell Crypto Sanctions Case

  • By Admin
  • February 1, 2020

For one thing, the mere act of giving a presentation in Pyongyang may need violated the U.S. Department of the Treasury Office of Foreign Assets Control’s (OFAC) sanctions, counting on what he said there, consistent with lawyers interviewed by CoinDesk. So could attempting to transfer money between the Democratic People’s Republic of Korea (DPRK) and another nation, as Griffith allegedly did. It probably won’t help his case if the govt proves he traveled to North Korea after the State Department denied him permission, as alleged.

Griffith pleaded acquitted during an arraignment Thursday, which kicks off subsequent phase of discovery. Prosecutors told a federal judge some documents have already been produced, with more to return . the complete amount of evidence they need to support their case has yet to be made public – including any exculpatory evidence that might show Griffith didn't violate sanctions restrictions.

The U.S. government takes sanctions “very seriously,” said Stephen Rutenberg, an attorney at the Polsinelli firm . “It wasn’t like he was going there to play music.”

Griffith’s attorney, Baker Marquart partner Brian Klein, declined to comment for this story, but has previously said Griffith shouldn't are indicted which his team “looks forward” to presenting the facts of the case to a jury. Klein is quickly becoming a star lawyer within the crypto and cybersecurity space, successfully representing high-profile clients including Charlie Shrem, Erik Voorhees and EOS’s Block.One, among others.

The case is probably going to be one among the foremost closely watched in crypto history. It’s the primary sanctions case during a U.S. court involving cryptocurrency, and comes at a time when the technology’s potential to bypass international restrictions on monetary flows is beginning to spook the financial establishment. 

For example, former high-level officialdom and academics believe a digital currency in some form could help so-called “rogue nations” undermine U.S. global hegemony, as gamed call at November by Harvard Kennedy School during a simulation. 

Presumed innocent

Prosecutors secured the indictment on Jan. 8, charging Griffith with conspiracy to violate the International Emergency Economic Powers Act (IEEPA) and adding an unnamed co-conspirator to be charged within the future. The Department of Justice arrested Griffith, an Ethereum Foundation staffer and research scientist, in late November. 

So far, U.S. authorities have published a couple of documents associated with the case, stating Griffith had been booked on charges of violating two executive orders prohibiting certain transactions and activities in North Korea , also as some associated legal violations. 

While Griffith is probably best known for his work on ethereum (he’s long held a reputation as a hacker), the case isn't such a lot a crypto case because it may be a national security issue that happens to involve the technology, said Jake Chervinsky, general counsel at Compound Finance.

“It should go without saying that any U.S. citizen who travels to North Korea and advises DPRK officials on the way to evade sanctions are going to be in trouble with the authorities, no matter whether crypto is involved,” Chervinsky said, though he was quick to feature the defense has yet to be presented.

“Although the allegations look bad for Griffith, we should always remember that he's entitled to the presumption of innocence and hasn't had the prospect to inform his side of the story yet,” Chervinsky said.

Nor is the case about truth, justice or an ethical crusade, said Danforth Newcomb, an attorney with firm Shearman & Sterling with a background in litigation and sanctions. In his view, the case boils right down to “the enforcement community’s understanding of the regulations,” which Griffith’s alleged actions violated.

‘Exporting services’

Executive order 13722, signed by President Donald Trump in 2016, prohibits U.S. persons from exporting services to North Korea .

“The facts, as reported within the press, pretty clearly seems like an exported service, and that i suspect therein interview he's reported to possess given to the FBI he admitted to facts that quantity to exporting services,” Newcomb said of Griffith.

U.S. citizens are U.S. persons, even when on foreign soil, he noted.

The complaint further adds that “Griffith began formulating plans to facilitate the exchange of [an unspecified cryptocurrency] between the DPRK and South Korea ,” acknowledging this is able to violate U.S. sanctions and yet still expressing a desire to return to North Korea .

Even if Griffith didn't shall conduct the transaction himself, simply showing the North Koreans the way to do so would also violate OFAC regulations, Newcomb said. 

“In OFAC regulations there's a facilitation concept which says that a U.S. person can’t facilitate a transaction or activity that U.S. persons can’t do themselves,” he said. this might , for instance , include telling a citizen of another nation the way to provides a presentation on fintech in North Korea , which the complaint alleges Griffith did (though a minimum of one witness to the conference claims that sanctions never came up). 

Public knowledge?

Griffith could see a couple of different issues in fighting the case, should he not arrange a plea bargaining . 

Newcomb said there are few precedents that have successfully challenged OFAC in court, while Chervinsky noted national security offenses have “a significant amount” of precedential cases. 

Griffith might claim everything he discussed during his presentation is public material. The Berman amendment to the IEEPA prevents OFAC from restricting informational materials within the property right from being bought or sold within sanctioned nations. 

But this argument might not delay in court, Newcomb said.

“I think it'll be OFAC’s position that it's irrelevant whether what he discussed in North Korea was open source or not,” Newcomb said.

The DOJ has been prosecuting national security cases for many years , Chervinsky noted. In recent years, the DOJ has even had a selected group – the National Security Division – liable for such cases. 

“The law applies equally no matter the sort of monetary tool that a defendant uses to violate national security laws,” he said. 

Missing information

While the indictment handed down on Jan. 9 reiterates the government’s allegations within the matter, it's largely unclear what specifically Griffith said during his speech and what information he shared with the North Korean government, Rutenberg said. 

There is a difference between helping the govt evade sanctions and just providing some basic, general information about blockchains. 

Griffith’s conversations with the FBI can also have an impression , a minimum of theoretically, Rutenberg said. 

While Griffith was arrested in California, he was transferred to the Southern District of latest York late last month. 

He was released on bail. While he has thus far physically appeared in a minimum of one among his hearings in ny , he now resides at his parents’ range in Alabama.