Fundamental to the due process of law is notice—a requirement that all parties are made aware that a lawsuit could alter their legal rights or duties. Most defendants will be served in person by a process server. But when the defendant is unreachable this way, some creativity may be required, especially when the defendants are only traceable through their actions on the blockchain, an instrument famous in part for its ability to keep its users private. After a hack of almost $8,000,000 of its funds, Liechtenstein-based cryptocurrency exchange LCX AG allegedly traced some of its stolen digital assets to different digital wallets. LCX AG was able to freeze the funds, but with no name stitched into the digital wallet, it still lacked a name and place to pursue legal action. At least, it lacked a physical place. But if LCX AG knew the location of the wallet, then perhaps it could serve the virtual place.
The tide of regulation of cryptocurrency and blockchain could be turning in the United States. Following comments by newly-confirmed Treasury Secretary (and former Federal Reserve Chair) Janet Yellen describing Bitcoin as “inefficient” and “extremely volatile,” the price of the coin dropped 10% in 24 hours. During her confirmation hearings, Yellen described cryptocurrencies as a “particular concern” and signaled that the Treasury would begin examining blockchain-based financial networks. On the heels of Secretary Yellen’s comments, Congressman Patrick McHenry (R-NC), head of the House Financial Services Committee, and Congressman Stephen F. Lynch (D-MA), Chair of the Financial Technologies Task Force, introduced H.R. 1602, bipartisan legislation which directs the CFTC and the SEC to “jointly establish a digital asset working group” to “provide regulatory clarity” and to “create a critical collaboration [between the two agencies to] create fair and transparent markets.” Notably absent from this proposed collaboration is any mention of antitrust enforcement or involvement of the DOJ antitrust division or the FTC. However, recent comments by outgoing DOJ chair Makan Delrahim provide clues as to how antitrust may play a part in the regulatory framework for blockchain and cryptocurrency.
With bitcoin and other cryptocurrencies reaching shocking new prices seemingly every day, some people have finally started putting the new payment systems to real use – paying lawyers. Earlier this fall Nebraska became the first state to hand down a formal ethics ruling on the propriety of lawyers charging their clients using bitcoin and other cryptocurrencies. In allowing lawyers to charge their clients via cryptocurrencies, so long as they then instantly exchange the virtual currency for U.S. dollars, the decision may be indicative of a larger trend in the legal industry.