Fwd: FTX DR 5-105 Records Request

[Gunnar Larson]

---------- Forwarded message ---------
From: Gunnar Larson <g at xny.io>
Date: Fri, Nov 10, 2023, 4:01 PM
Subject: Fwd: FTX DR 5-105 Records Request
To: <letitia.james at ag.ny.gov>
Cc: Harris, Adrienne A (DFS) <Adrienne.Harris at dfs.ny.gov>, Reader, Shaun <
sreader at curtis.com>, <ftxquestions at kroll.com>, <frc at fincen.gov>


Madam Attorney General:

We were doing the EOY-23 wrap and noticed potential FTX conflicts.

Has New York State conducted a similar conflicts check as the assets are
now under the BitLicense purview?

Similarly, NY-DFS has sent xNY.io - Bank.org communications regarding STX.

Are we to assume that FTX and STX regultion in New York are under excess
D&O coverage? Yesterday we received a notice that FTX's excess D&O was
something we should check with you on.

When we spoke with FinCEN on STX association last year, they mentioned to
reach out to Treasury's kleptocracy division.

STX and NYCCoin are a open D&O policy matter and I am just coverning all
bases to make sure FTX has nothing to do with this. I am not sure how Kroll
has tabulated conflicts.

xNY.io - Bank.org must disclose no  kleptocracy associations at NYCCoin,
STX or with FTX assets trading now under BitLicense regulation. We are not
exactly sure how FTX is making money after the original fraud. I am sure
FTX or STX trading would not be involved against the best interest of New
Yorkers.

Attorney General James, looking at the numbers ... The D&O excess is nearly
10x the estimated 1B figures estimated by FTX's current CEO. This is
something xNY.io - Bank.org cannot cover under our D&O, so I hope it is not
something NY-DFS is calculating as ongoing FTX fraud.

As you know, the STX racket fraud question is ongoing.

xNY.io - Bank.org reserves all rights.

Happy Veterans Day.

Thank you,

Gunnar

Gunnar Larson
xNY.io - Bank.org
917-580-8053

--------- Forwarded message ---------
From: Gunnar Larson <g at xny.io>
Date: Fri, Nov 10, 2023, 10:55 AM
Subject: FTX DR 5-105 Records Request
To: <ftxquestions at kroll.com>
Cc: Reader, Shaun <sreader at curtis.com>, <FRC at fincen.gov>


Hello there:

New York is one of the few states that require lawyers to check for
conflicts of interest before accepting any new engagement.

In 1996, NY adopted DR 5-105(E), a new paragraph of New York’s main rule
governing conflicts of interest. DR 5-105(E) contains three sentences
(which I set off here in bullets to make the rule easier to read):

• “A law firm shall keep records of prior engagements, which records shall
be made at or near the time of such engagements and shall have a policy
implementing a system by which proposed engagements are checked against
current and previous engagements, so as to render effective assistance to
lawyers within the firm in complying with DR 5-105(D).”

• “Failure to keep records or to have a policy which complies with this
subdivision, whether or not a violation of DR 5-105(D) occurs, shall be a
violation by the firm.”

• “In cases in which a violation of this subdivision by the firm is a
substantial factor in causing a violation of DR 5-105(D) by a lawyer, the
firm, as well as the individual lawyer, shall also be responsible for the
violation of DR 5 105(D).”

The rule thus embodies two separate obligations. Law firms must:

1. Make and keep contemporaneous records of prior engagements at or near
the time of such engagements

2. Have a policy implementing a system for checking proposed engagements
against current and previous engagements.

xNY.io - Bank.org would like to check for conflicts of our interest
concerning FTX's asset sale and New York State's regulator who is
overseeing Trusts holding FTX assets.

Participants, the Trust or the Sponsor may be required to comply with
FinCEN regulations, including those that would mandate the Authorized
Participant to implement anti-money laundering programs, make certain
reports to FinCEN and maintain certain records.

Similarly, the activities of an Authorized Participant, the Trust or the
Sponsor may require it to be licensed as a money transmitter or as a
digital asset business, such as under the New York State Department of
Financial Services’ BitLicense regulation.

Would you please be able to send us a confirmation of your DR 5-105 records
on FTX clearing xNY.io - Bank.org of any associated conflicts to FTX.

Thank you,

Gunnar

Gunnar Larson
xNY.io - Bank.org
917-580-8053
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