Former NY financial watchdog counters criticism on bitcoin work

NEW YORK (Reuters) - Former New York financial regulator Benjamin Lawsky on Tuesday countered criticism from the bitcoin community that he may have generated consulting work for himself by issuing controversial regulations for virtual currency firms before he left his post.

New York State Department of Financial Services Superintendent Benjamin Lawsky speaks during the Reuters Financial Regulation Summit in New York, April 29, 2014. REUTERS/Mike Segar

Lawsky, who departed last month as superintendent of the New York Department of Financial Services, started his own firm to advise companies on regulation and other matters.

In his first public appearance since his transition, the outspoken former regulator was interviewed at a digital currency conference in Manhattan.

Marc Hochstein, editor-in-chief of the American Banker, asked Lawsky about the possible conflict of interest in his issuing regulations governing bitcoin on June 3. New York was the first state to do so.

“To clear the air,” Hochstein asked, “what would you say to someone who would think that maybe you built yourself a revolving door?”

Lawsky responded that he was not allowed to do any work before the department for two years, including behind-the-scenes work. He also said he is banned for life from working on any matter he worked on at the department.

“The rules are very clear,” Lawsky said. “If anyone... said ‘I want to hire you to help get a BitLicense from DFS,’ no can do.”

Still, Lawsky did not rule out taking on virtual currency clients.

Lawsky left the department on June 16, after four years of running the agency and overseeing landmark settlements with global banks accused of misconduct.

He began to make a name for himself in 2012 when he threatened to revoke British bank Standard Chartered Plc’s license to operate in New York over violations related to U.S. sanctions.

He registered The Lawsky Group in Delaware on June 17, according to the state’s website. His new company’s address is 27 East 62nd Street in Manhattan, according to the company website, a domain name registered in early May.

However, the 62nd Street building is under construction, according to a spokeswoman for billionaire Ronald Perelman’s MacAndrews & Forbes, which owns it. Lawsky told Reuters he would move into the building in the fall.

MacAndrews & Forbes’ general counsel Steve Cohen offered to loan Lawsky temporary space, a Perelman company spokeswoman said.

Cohen is a former top aide to New York Governor Andrew Cuomo, who chose Lawsky as superintendent. The pair also worked together under Cuomo when he was New York Attorney General.

Reporting By Karen Freifeld; Editing by Bill Rigby