---------- Forwarded message ---------
From: Gunnar Larson <g@xny.io>
Date: Fri, Nov 10, 2023, 4:01 PM
Subject: Fwd: FTX DR 5-105 Records Request
To: <letitia.james@ag.ny.gov>
Cc: Harris, Adrienne A (DFS) <Adrienne.Harris@dfs.ny.gov>, Reader, Shaun <sreader@curtis.com>, <ftxquestions@kroll.com>, <frc@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@xny.io>
Date: Fri, Nov 10, 2023, 10:55 AM
Subject: FTX DR 5-105 Records Request
To: <ftxquestions@kroll.com>
Cc: Reader, Shaun <sreader@curtis.com>, <FRC@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