The regulatory environment for crypto has shifted meaningfully since 2024 — but meaningful is not the same as settled. To get a ground-level read on where things actually stand, CCS sat down with Christopher O’Brien, head of crypto at Venable LLP and one of the longest-tenured crypto attorneys at a major U.S. law firm. The conversation covered the current regulatory landscape, practical dos and don’ts for Web3 founders, the role of AI in legal work, and a contested extradition case that O’Brien says exposes the unfinished business of the prior administration’s enforcement posture.

A Decade in Crypto Law — Background and Context

O’Brien entered the crypto space in 2016 — a time when relatively few attorneys at major U.S. law firms were taking the industry seriously. In the years since, his practice at Venable LLP has spanned nearly every corner of the industry: token issuances, investor representation, early-stage advisory work, Hollywood talent, and institutional players. He was involved in the major crypto bankruptcies of 2022–23, including FTX, Celsius, and Terra. He has worked with clients before the Trump administration and contributed to draft legislation including the Clarity Act.

One notable deliberate omission: ICOs. “We did not do ICOs because we knew that those were going to run into legal issues with the SEC in the courts,” he said. That judgment proved correct.

He frames the current moment as his third crypto winter — a period he expects to resolve within roughly 18 months, consistent with the prior two cycles. He notes the absence of a single clear catalyst, pointing instead to institutional investors rotating out of ETFs and large holders responding to broader macro uncertainty. His read: this is a different character of downturn than a structural industry failure, and it implies a different kind of recovery.

What Has — and Hasn’t — Changed Under the New Administration

After years of what O’Brien — along with a significant portion of the industry — characterized as a hostile enforcement environment under the Biden administration, the change in Washington has produced real but incomplete shifts. Dedicated crypto enforcement task forces at the SEC and the DOJ have been disbanded. The overall posture is more constructive. And the SEC has reopened its dialogue with entrepreneurs — no-action letters, which provide staff-level guidance on how the agency currently interprets the law for a specific project, are being issued again. Biden-era officials and supporters of that enforcement approach would argue those actions were legitimate consumer protection and fraud prevention, not industry targeting.

What has not materialized is the overarching market structure bill the industry was hoping for — legislation that would clearly classify digital assets as securities or commodities and establish durable rules that could survive a change in administration. The Genius Act, which established a framework for stablecoin regulation, passed in 2025 and represents a concrete first step. But for the broader crypto market, the legal gray zone persists.

O’Brien argues the ongoing uncertainty is itself part of what is driving the current downturn. “People came around to the point of view that regulatory clarity is a good thing. It’s good when you know the rules of the road. We’re just not getting it yet out of the political process.” His bottom line for founders: don’t let the absence of a market structure bill paralyze you. The environment is better than it was — use it.

Legal Dos and Don’ts for Crypto Founders

Asked to distill his advice for an early-stage founder, O’Brien’s priorities were clear and direct.

• Get qualified, crypto-experienced legal counsel early. Not just any lawyer — someone with real track record in this space. The cost of fixing bad lawyering after the fact almost always exceeds the cost of doing it right the first time. As O’Brien put it: “We’re expensive, but we’re really cheap compared to doing it raw.”
• Get corporate structure and tax treatment right from day one. A structural mistake can create a multi-million dollar tax liability. Jurisdiction selection — where you incorporate, where you operate, which customers you serve — has real consequences.
• Implement robust KYC and AML procedures. Regulators have consistently targeted compliance failures at early-stage companies. Good procedures reduce exposure but do not eliminate it — founders can still face liability based on what they knew or should have known about how their platform was used.
• Engage with regulators proactively. With SEC no-action letters available again, there is now a legitimate path to get staff-level guidance on novel projects. “We have a lot more hope to get to an answer that we feel pretty good about today than we did even a year ago.”
• Use AI tools carefully, with a human attorney in the loop. O’Brien’s firm uses AI in its practice — in closed systems, with client consent. He is impressed by what AI does well with discrete tasks. He is unambiguous about its limits: it cannot surface the issue it didn’t flag, negotiate a redline, or stand up in court. “Don’t let a fast-growing adolescent AI structure your company.”

The Bitzlato Case: A Contested Extradition Story

Bitzlato was a peer-to-peer cryptocurrency exchange, registered in Hong Kong, that operated primarily in Russian-speaking markets. It was not a globally prominent platform — O’Brien says he had not heard of it before being approached to take the case. Legkodymov, a Russian software engineer who had previously worked in Silicon Valley, founded the exchange in approximately 2016.

The U.S. Department of Justice saw it differently. According to the DOJ, Bitzlato processed over $4.5 billion in cryptocurrency transactions since 2018, with a significant portion allegedly tied to illicit activity. The agency’s core allegation was that the exchange deliberately maintained weak identity verification procedures, making it accessible to criminals — including customers with connections to Hydra, one of the largest darknet drug marketplaces ever operated. Court documents introduced during extradition proceedings included chat logs in which Legkodymov allegedly acknowledged that a portion of his platform’s users were involved in drug trafficking and other criminal activity, and that he and colleagues discussed — but did not act on — restricting their access.

Legkodymov’s legal team disputes the jurisdictional basis of the prosecution. The exchange explicitly blocked U.S. users — attempting to register with a U.S. passport resulted in rejection — and O’Brien argues the approximately $31,000 ever traced through U.S. accounts came from users who falsified their location or identity to circumvent those restrictions. The defense contends the government’s theory stretched U.S. money transmission law further than it has typically been applied: that a single dollar touching a U.S. account was sufficient for jurisdiction, and that general awareness of some illicit customer activity — rather than direct participation — was sufficient for criminal liability. Prosecutors and the presiding judge saw the matter differently, as reflected in the guilty plea and subsequent extradition ruling.

Legkodymov was arrested in Miami in January 2023, pleaded guilty in December 2023 to a single charge of operating an unlicensed money transmission business, forfeited $23 million in crypto assets, and agreed to shut down the platform. A federal judge sentenced him to time served — 18 months — in July 2024. O’Brien notes that the judge had heard the full case, with the full resources of the DOJ and FBI on the other side, and concluded 18 months was sufficient.

France, which had been involved in the initial coordination of the arrest, subsequently filed an extradition request. According to O’Brien, French prosecutors had given assurances that Legkodymov would not be prosecuted in France if he cooperated — assurances his team says were not honored. In September 2025, a U.S. federal court in the Western District of Pennsylvania certified France’s extradition request, finding that the probable cause threshold under the applicable extradition treaty had been met. As of publication, legal proceedings are ongoing; a formal pardon request was submitted to President Trump in July 2025.

Both Sides of the Argument

Case Timeline

Where the Industry Stands — and Where It’s Heading

The Bitzlato case is one data point in a much larger shift the crypto industry is still working through. The enforcement posture has changed. The legislative environment is moving — slowly, incompletely, but in a direction the industry can work with. The Genius Act is a foundation, not a ceiling. And the SEC’s renewed willingness to engage founders in dialogue means that building in gray areas, while still carrying risk, no longer requires doing so in a complete vacuum.

O’Brien’s overall read of the moment is cautiously optimistic. He has been through this cycle twice before. Bitcoin was $4,000 at the bottom of the first winter he navigated; it has not revisited that floor since. Each cycle has carried the industry further, built more infrastructure, attracted more institutional capital, and — gradually — more regulatory seriousness. The current downturn has no single dramatic cause, which also means no single dramatic rupture to repair. “The general trend line of the industry goes up over time,” he said. “If you’re in it for the long term, you’re in it for the long term.”

For founders and investors alike, the practical message from this conversation is consistent: build the legal foundation correctly, engage with regulators rather than avoiding them, and recognize that enforcement risk — even for operators acting in good faith — remains real and international in scope. The Bitzlato case, whatever its ultimate resolution, is a reminder that the rules of the road in crypto are still being written, and that the people writing them are paying attention.