On May 22, a Florida appellate court
set aside the state’s Office of Financial Regulation (OFR) Emergency Suspension Order (ESO), suspending a Florida-based digital assets company’s (Petitioner) money services business (MSB) license. The OFR issued the ESO because Petitioner’s controlling shareholder and CEO had entered into federal plea agreements for BSA/AML violations. Under Fla. Stat. § 120.60(6), the OFR “may” suspend an MSB’s license if the OFR finds the licensee posed an “immediate serious danger” to “public health, safety, or welfare.” However, the OFR may only take such action by procedure that would be “fair under the circumstances,” and must describe its “reasons” for concluding that the procedure was fair. Petitioner argued that the ESO, among other things, did not meet this standard, and the Court agreed.
The OFR’s ESO did not state specific reasons for concluding that its procedures were fair, and instead merely relied on § 120.60(6) for blanket authorization. According to the court, the ESO should have offered an explanation as to why less drastic measures were insufficient or acknowledged the potential harm to Florida consumers. To comply with the ESO, for example, Petitioner would need to liquidate all digital asset holdings for all Florida customers, with a total of 170,000 accounts, which would threaten financial harm and might create “unplanned and extensive” tax liabilities to customers. Because the ESO did not discuss the OFR’s reasoning or alternative remedies, the court held the ESO was not fair under the circumstances. As such, the court set aside the ESO, but stayed its order pending timely and authorized motions for rehearing.
