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First bankers, now lawyers: cryptocurrency industry’s latest hiring frenzy

The cryptocurrency industry is ramping up efforts to recruit more legal talent as it faces increased regulatory pressure while looking to be accepted by and become part of mainstream finance.

Crypto exchanges and companies are poaching attorneys left and right, from both law firms and other crypto companies, bringing them in-house to help navigate an evolving regulatory landscape while helping to curb outside legal expenses, industry participants said. Law firms, which are sometimes losing their partners to in-house positions, are also building up their crypto practices to maintain that valuable expertise.

The increased demand for lawyers also marks a turning point for crypto, whose early supporters often expressed scepticism of regulation. The industry has been expanding rapidly with hopes of attracting more mainstream investment opportunities and many are embracing the stance that they want regulatory clarity.

“In [the crypto] space, the consensus is you need to have someone in-house early,” said John Wolf Konstant, a senior consultant at technology-focused legal recruiting firm Whistler Partners. “Especially since investors are going to require that, you need to have someone there to help chaperone the process and to make sure everything is buttoned up from the start.”

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Competition is also driving up salaries in the crypto space at a faster rate than in the larger in-house legal market, particularly for senior-level positions, Konstant said. Total annual packages, including tokens and equity, can run into seven figures at the very top of the market, he added.

Marco Santori, chief legal officer of Kraken, tweeted in February that the San Francisco-based crypto exchange was looking to hire 30 lawyers in the next three months. He added that he would like to hire 60, “but honestly I don’t know how to get it done”.

“Kraken legal is fully on track with its hiring goals since my comments in February,” Santori said last week in an email. “We are attracting the best lawyers from both traditional finance and white-shoe firms. The brain drain is real and we couldn’t be happier with it.”

Lawyer Jorge Pesok recently joined crypto-based nonprofit HBAR Foundation, which gives out grants to projects, as its chief legal officer after about 10 months as general counsel and chief compliance officer at crypto exchange Tacen. Before Tacen, he was at law firm Crowell & Moring.

“The market is hot,” Pesok said, adding that he received four job offers before he chose HBAR, primarily because of its commitment to sustainability, and he wasn’t even looking for a new position. “Everybody is looking for talent,” he said, adding that for HBAR, even the simple grants it makes require help, given the nuances of cryptocurrency and the regulatory scrutiny around the industry.

Recruiter Whistler Partners said about 10% to 15% of all recent placements have been in the crypto or financial technology sectors, with firms hiring for both in-house counsel and law firm positions, according to Konstant, who himself was a lawyer before moving to the recruiting field. He said the firm was working on six to 10 in-house legal jobs in the blockchain or fintech space over the past year at any given time.

Konstant said there is a great deal of competition for all legal talent across sectors, where candidates for in-house roles may receive multiple offers. But “for the crypto space, it’s more pronounced,” he said, adding that there is a huge demand for those with specialised knowledge in crypto and previous experience working at law firms that specialised in crypto or having built in-house crypto-focused teams.

As with most other jobs, firms operating in the crypto sector would prefer to hire someone with some relevant direct experience, but most expect to train new legal staff on the job as they learn about the specific projects each firm does.

Gregory Lisa, who most recently was a partner at law firm Hogan Lovells in Washington DC, joined decentralised financed-focused company Element Finance as its first chief legal officer in December. Lisa, who previously worked as a regulator at the Financial Crimes Enforcement Network, said his new position at the 25-person startup, which builds open-source protocol for fixed- and variable-yield tokens, offers him the chance to focus on the growth of one company, versus a portfolio of clients as an external counsel. His responsibilities now include engaging with regulators and law enforcement and managing internal legal issues.

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“You really get a chance to write the script and to engage with companies at an early stage,” Lisa said, adding that he has also stayed on as a special adviser for Hogan Lovells to help with the transition.

Cathy Yoon joined crypto technology company MPCH at the end of March as its chief legal officer after less than a year as general counsel of crypto exchange INX. She said she had no intention of moving jobs, but was interested in helping build blockchain infrastructure that could more easily support and onboard additional blockchain assets, which isn’t possible currently. So far, her day-to-day work includes managing internal corporate matters, such as the structuring of legal entities and intellectual property issues, and facilitating meetings with potential investors and customers.

The increasingly competitive job market also demands more lawyers who are “very commercial,” Yoon said, since crypto companies want to bring in attorneys early on to brainstorm with tech teams on what problems their products are meant to solve. “There has been a shift from lawyers being seen as ‘keeping us out of trouble,’ to becoming important members of the management team,” she said.

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Law firms, some already struggling with a shortage of talent, are beefing up their crypto services as well, sometimes looking to acquire a whole team from other firms.

Orrick Herrington & Sutcliffe is looking to build “a complete offering” of services for blockchain firms, from helping with entity formation to advising on regulatory issues, according to Daniel Forester, a partner at the firm and leader of its fintech practice. The law firm, with roots in the traditional technology sector, currently has about 20 partners leading its crypto-related work and is looking to lure current regulators and candidates or teams from other law firms or in-house positions, he said.

Facing increasing competition for legal talent, Forester said Orrick continues to focus on retaining employees, including those at the associate level. “There are more positions than people,” he said of the legal industry as a whole. “The key to long-term success is retention.

Write to Mengqi Sun at mengqi.sun@wsj.com

This article was published by The Wall Street Journal, part of Dow Jones


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Justice Department Installs New FBI Crypto Crime Unit

The Federal Bureau of Investigation is launching a unit dedicated to tracking and seizing illicit cryptocurrencies as part of a broader shift in focus toward disruption of international criminal networks rather than just their prosecution.

Deputy Attorney General Lisa Monaco said Thursday that the new team, called the Virtual Asset Exploitation Unit, will centralize the law enforcement agency’s cryptocurrency expertise and provide blockchain analysis, virtual asset seizure and training to the rest of the FBI.

“This FBI unit will combine cryptocurrency experts into one nerve center,” said Ms. Monaco, speaking at the Munich Cyber Security Conference.

Cryptocurrency has emerged in recent years as the primary means by which cybercriminals reap the financial rewards from cyberattacks. A February report issued by blockchain analysis company Chainalysis Inc. estimates that around $11 billion in cryptocurrency holdings at the end of 2021 had illicit sources. Law enforcement agencies have zeroed in on disrupting the economics of cybercrime as a key prevention tool, by recovering funds paid in ransoms or stolen by hackers and identifying hackers through transactions.

The FBI’s Virtual Asset Exploitation Unit will work with the Justice Department’s National Cryptocurrency Enforcement Team, a group of about a dozen prosecutors that Ms. Monaco established in late 2021.

The DOJ announced earlier Thursday that Eun Young Choi, a career federal prosecutor, will serve as the NCET’s first director.

The Justice Department also announced an international virtual currency initiative, through which it will help law enforcement authorities in other countries improve their techniques and abilities in cryptocurrency investigations, Ms. Monaco said.

International law enforcement agencies have helped in previous cybercrime investigations, she added. “We can’t do this alone,” she said.

The DOJ is taking additional measures to step up its cybercrime work with international law enforcement authorities. U.S. prosecutors handling significant cybercrime investigations will now be required to consult with department experts to identify foreign partners that could help, Ms. Monaco said. A new Justice Department cyber operations liaison will be embedded in Europe and work with U.S. prosecutors and European officials to speed up cases against top cybercriminals, she added. “International cooperation will not be an afterthought,” Ms. Monaco said.

Tonya Ugoretz, deputy assistant director of the FBI’s cyber division, said that international cooperation has already borne fruit.

“We’ve had some notable successes, not only in infrastructure takedowns but also arresting and extraditing some of the criminals behind this activity, as well as some notable virtual currency seizures,” she said while speaking at the same conference as Ms. Monaco.

On Feb. 8 the Justice Department said it seized around $3.6 billion worth of cryptocurrency stolen during a 2016 hack of an exchange. The value of the cryptocurrency at the time made it the largest financial seizure in the Justice Department’s history. Ms. Monaco said this and other efforts involving cryptocurrency seizures should encourage companies to report incidents as early as possible.

“If you report to us, we can follow the money and not only help you but hopefully prevent the next victim,” she said.

Federal prosecutors and investigators will also start looking for ways to disrupt cybercrimes before they happen, instead of waiting to charge perpetrators afterward, Ms. Monaco said. Authorities could, for example, seize servers used to carry out attacks or issue decryptors to help victims whose data is encrypted during an attack, she said.

Ms. Monaco said the efforts to disrupt cyberattacks before they occur will require a cultural shift similar to the Justice Department’s counterterrorism work after the Sept. 11, 2001, terrorist attacks in the U.S. The Justice Department will consider “all available tools” to disrupt hacking crimes and reduce risks to victims, she said, including sanctions, export controls and efforts with international partners and the private sector.

“We should be looking for success both inside and outside the courtroom. My message to cybercriminals is equally clear: The long arm of the law can and now will stretch much farther into cyberspace than you think,” she said.

Write to James Rundle at james.rundle@wsj.com and Catherine Stupp at Catherine.Stupp@wsj.com

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