Banking

Making Crypto Available to Everyone

CCBJ: Can you give us a little bit on your background and what brought you into the legal space?

Tom Davis: I’ve been a licensed attorney for over 27 years. I’m probably one of the few attorneys in the United States that’s licensed in Washington, Oregon, and Alabama. 27 years ago, I was working as a trial attorney for a law firm in Alabama when I was recruited by the Federal Bureau of Investigation. At that time, they were very interested in lawyers becoming special agents, which is something I’d always wanted to do for all the typical reasons. After a very lengthy application process, as I’m sure you can imagine, I was assigned to work for a white-collar squad in Seattle. That’s how I moved out west.

Since that time, I’ve parlayed my early litigation and investigation experience into non-traditional legal jobs. I knew early on I wasn’t cut out to be a traditional attorney. What I was interested in was internal investigations. Corporate malfeasance, embezzlement, things that were happening inside very large corporations that required attention. The Big Four accounting firms were very interested in my type of background because stories like Enron were popping up back in that day. Long story short, I was at KPMG and Grant Thornton and then as a partner at Moss Adams, where I led nationwide litigation, forensic and investigation practices.

Despite all the training I’d received and the various interesting engagements I’d been involved in, I did want to return to a legal role, but I wanted to do it in-house, as a general counsel. I became a corporate counsel for a Seattle startup called Airbiquity and eventually became its general counsel. I was there for approximately 10 years. Much like Coinme, I was the company’s first in-house legal resource. Airbiquity was the first technology provider that allowed cars to talk to call center like OnStar. Airbiquity was one of the first that enabled telematics communication technology.

I had a couple of interesting jobs after that, all of which prepared me for my current job. One was vice president of operations and fraud prevention at Garden City Group (GCG) since acquired by Epiq legal services. GCG was the world’s largest third-party administrator of cash action settlements, so part of my job, in addition to running particular cases, was fraud prevention, which can be pretty significant in the class action world. Think about all the class action notices you get as a consumer and how that could be leveraged by fraudsters. I also ran the anti-money laundering program at GCG to monitor suspicious or illegal transactions. From there I went to IBM, where I spent six years in fraud prevention and AML solutions for some of the top banks in the world. That experience led me to Coinme. Where I’m leveraging my background as an in-house resource, but also, relative to cryptocurrency exchange, my experience with compliance, money laundering, and fraud prevention, specifically.

What drew you to Coinme? How do you see yourself helping fuel the success of this business?

In my wanting to get back to a purely legal role, there were some boxes that I wanted to check. One is I wanted a startup environment because I missed the excitement of that and being a part of things at the ground level. While Coinme isn’t really a startup (it’s been around since 2014), I like the fact that it has a very established ATM network. Our partnerships with Coinstar and MoneyGram, are already extremely mature. I liked the fact that the meter’s already running here.

What also attracted me to Coinme is my interest, from an investment standpoint, in cryptocurrency. The story behind it, and specifically around Bitcoin, is really fascinating. But irrespective of one’s feelings about crypto, or its viability, future, or economics, what I like about Coinme is that it is creating revenue while we sleep. Right now, it is cash-centric, although we are moving to digital plays in the future here very quickly). It created a platform for the unbanked, the folks that are unable to get bank accounts. Coinme offers them a foundation to do banking via cash. So I like our business model and that it makes crypto available to everyone.

What challenges do you anticipate in this new role, and as this facet of banking matures?

There are going to be some unique challenges. I mean, first, because of its “startup” aspect, and I use startup in quotes based on my previous answer. I don’t see anything unique to Coinme as far as startups. But startups generally are moving at a thousand miles an hour these days and putting out the brush fires that are in front of you and then, as the company matures, bringing in general counsel to create a compliance framework that addresses things before they become brush fires.

That’s what I’m doing; meeting with all the department heads, understanding how they’re operating, what are their policies and procedures—from compliance to operations to marketing to sales. Then, dovetailing how we’re currently doing things with what I know to be the right way to do things in a legally compliant manner. I’m offering changes at a macro level and thus far everybody is very open to that. And in the process, I’m learning a lot about the operations of Coinme.

Secondly is the cryptocurrency aspect and, more specifically, our licenses to be a cryptocurrency exchange. I mean, that is a heavily regulated environment and making sure our licenses are up to snuff and our examinations are clean and the regulators know and understand what we’re doing. That’s a large part of my job as general counsel. One of the biggest goals I had in coming in here was to establish an excellent, transparent relationship with compliance. When I arrived, we did not have a CCO. We had an interim CCO who was doing a great job, but one of the boxes I really needed to check was helping bring in a good qualified CCO, which we have done.

In fact, our new CCO, Brian Reisbeck, starts today. I haven’t inundated him yet with the 22 things he and I need to talk about, but just getting a new CCO in place was a big box to check. I’m instantly more comfortable knowing that our compliance team is directed in an appropriate manner. Beyond the GC 101 stuff, there’s the crypto stuff. Our trajectory is skyrocketing and a large part of why I’ve been brought in is to help spearhead some very important strategic commercial deals and partnerships that are going to allow our continued growth and success. I’m very excited about those types of discussions and letting the world know about some other things that Coinme’s going to be doing in the future. I’m a busy boy.

Are there parallels to online betting, another market that is expected to expand in the future?

Online betting is going to be huge. It’s pretty much brand new; I mean two, three years ago, it never even existed as a legalized function in most states. Now it’s legal in many states. How online betting works, and the protocols associated with it have to be described to regulators. The same goes for crypto kiosks. How many ATMs are out there where you can buy Bitcoin? Not very many. We’re having to describe how it works and the controls we have in place. Fortunately, we have excellent partners in Coinstar and MoneyGram. They’re equally up to the task of making sure this is handled in a consumer-friendly way. So much like online gaming, we’re doing a bit of education for the regulators.

You have your new CCO. What other key elements do you envision for the Legal and Compliance Departments?

It’s going to depend on what we’re doing as far as productization going forward. Right now, we’re strictly cash-to-crypto. But as we go to full digital buying and selling of assets, that’s going to involve a whole new playbook for both Legal and Compliance. Brian and I are basically starting at the same time. We understand the product roadmaps going forward and we’re going to be advising on that. New products will need to be rolled out in a compliant and consumer-friendly way. I’m also working on - and we’ll need to get Brian quickly up to speed here - on our advertising and our Google ads and our T&Cs; making sure that they are crisp and clear and adhere to all FTC guidelines regarding how we communicate with our customers and potential consumers. 

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