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Cryptocurrencies And The FCPA: So What?


There are many things that are FCPA relevant, but not all things are FCPA relevant. As to the later, I’ve been asked several times in recent months different versions of the same general question: what is your view of cryptocurrencies and the FCPA?

I suppose if I wanted to I could blast out (like many FCPA Inc. participants often do) an alert or article highlighting the “emerging risks” and or “hidden dangers” of cryptocurrencies and then use this trigger to market Foreign Corrupt Practices Act compliance services. But this is not what motivates me to write or consistent with my goal of being candid and calling the “balls and strikes” as I see them the regardless of what it may mean for my pocketbook.

Thus, as highlighted below in more detail, my general answer to the above question has been: I don’t really have a view because I don’t think cryptocurrencies – from the standpoint of liability under the FCPA’s anti-bribery provisions – present any unique issues.

The anti-bribery provisions refer to the offer, payment, promise to pay, or authorization of the payment of any money, or offer, gift, promise to give, or authorization of the giving of “anything of value.” This obviously includes more than just the proverbial suitcase full of cash and less tangible things of value mentioned in FCPA enforcement actions have included (to name just a few) handbags; a bottle of wine; a camera; kitchen appliances and business suits; television sets, laptops and appliances; and tea sets and office furniture.

The FCPA’s anything of value element has no minimum monetary threshold and the DOJ/SEC issued FCPA Guidance states:

“An improper benefit can take many forms.  While cases often involve payments of cash […] others have involved travel expenses and expensive gifts.  Like the domestic bribery statute, the FCPA does not contain a minimum threshold amount for corrupt gifts or payments.  Indeed, what might be considered a modest payment in the United States could be a larger and much more significant amount in a foreign country.”

To my knowledge, $4 is lowest thing of value mentioned in an FCPA enforcement action (see here).

In short, it is quite clear that cryptocurrencies are something of value and those inclined to violate federal law have long sought to use advances in technology to accomplish their goals. Who really cares if the value of cryptocurrencies fluctuate or are difficult to assess. (See here for a recent FCPA Blog post on the topic). Things of value in FCPA enforcement actions (such as purchasing an asset from a foreign official at an alleged inflated price or dividend and bearer shares in a corporation) likewise fluctuate or are difficult to assess.

As to the anything of value element, FCPA enforcement officials have talked about enforcing the FCPA to its “fullest extent.” As stated by the SEC’s Director of Enforcement:

“[T]he FCPA precludes the payment or provision of “anything of value” to a foreign official in order to induce that official to take official action or obtain an improper advantage for the purpose of obtaining or retaining business. And of course ‘anything’ of value is, on its face, a broad term.  Obviously, cash payments count.  Similarly, tangible gifts to foreign officials undoubtedly qualify as things of value.  But the Commission has also successfully brought FCPA cases where other, less traditional, items of value have been given in order to influence foreign officials.”

It is not hard to imagine the “fullest extent” of the FCPA including cryptocurrencies as a thing of value in a future FCPA enforcement action against the backdrop of the enforcement agencies taking the position that bona fide charitable donations (see Schering-Plough, Eli Lilly, Nu Skin Enteprises, Alstom and Stryker enforcement actions) and internships (including unpaid) can constitute something of value to an alleged “foreign official.”

In the enforcement actions concerning charitable donations, the government seems to have placed itself in the shoes of the alleged “foreign official” and asked whether the individual subjectively valued the donation and/or whether securing the donation provided the official with an intangible benefit of enhanced self-worth or prestige. In other words, the perception of the recipient and the subjective valuation of the thing of value conveyed may be a key factor in an enforcement agency analysis of whether “anything of value” has been given to a “foreign official.”

For instance, in an internship enforcement action against financial services company BNY Mellon the government found that the company violated the FCPA’s anti-bribery provisions for providing ‘‘valuable student internships to family members of foreign government officials affiliated with a Middle Eastern sovereign wealth fund.’’ As to the personal benefit issue, the government stated: “the internships were valuable work experiences, and the requesting officials derived significant personal value in being able to confer this benefit on their family members.” Likewise, in an enforcement action against Qualcomm the government found that the technology company violated the FCPA’s for “provid[ing] or offer[ing] full-time employment and paid internships to family members and other referrals of foreign officials with the purpose of trying to influence those officials to take actions that would assist Qualcomm in obtaining or retaining business in China.” Similarly, in an enforcement action against financial services company JPMorgan, the government found:

“[T]he firm provided valuable jobs and internships to the relatives and friends of certain key executives of its clients, prospective clients, and foreign government officials in the Asia-Pacific region (‘‘APAC’’) as a personal benefit to the requesting officials in order to obtain or retain investment banking business or other benefits for the firm. Many of JPMorgan’s clients were state-owned entities (‘‘SOEs’’), and therefore the client executives requesting employment for their relatives and friends were foreign government officials under the FCPA. The firm provided these jobs and internships with the intent to corruptly influence the foreign government officials making the requests.”

In short, with FCPA enforcement actions including allegations that $4, tea sets, charitable donations, and internships for family members constitute things of value for alleged foreign officials, it is not hard to image a day when an FCPA enforcement action will include allegations concerning cryptocurrencies and if this happens it will likely not present any unique issues, against the above enforcement backdrop, from the standpoint of liability under the FCPA’s anti-bribery provisions.

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