THE COURT: I'll hear you. Any reply?
MR. CONLEY: Yes, Your Honor. Just quickly, to go back to the standing issue. The opposing counsel argues that this is a facial challenge. And while the petitioner does attempt to bring a facial challenge to this regulation there is still a requirement that he himself has been injured by the regulation. And it's an injury in fact, it's not an injury based on hypotheticals. The New York State Court of Appeals has defined an injury in fact to mean that the plaintiff will actually be harmed by the administrative action. The plaintiff is basing -- the petitioner is basing his standing argument on a self-professed expertise in the field of virtual currencies, but speculation on how a law is -- or a regulation may or may not be enforced in the future is far too attenuated to confer standing to someone to challenge your regulation . Shifting to
THE COURT: I don't think he said that. He's basing his challenge that he was harmed -- well, obviously he gives these cases that he cites to, but he says he basically had to shut down the business and he incurred losses as a result of that. How are those losses not injuries in fact to that particular petitioner?
MR. CONLEY: Your Honor, they may be an injury to the particular petitioner, but they are not connected in any way to the actual regulation. It's based on the petitioner's understanding of how the regulation might have impacted his business in the future. The Department never advised him to shut down his business. That was the petitioner's decision based on his understanding of what could potentially happen under the regulation in the future. And that -- that type of speculation is is not enough to establish that an administrative act has actually caused harm that would be considered an injury in fact.
THE COURT: So it's the Department's position that the petitioner would have had to have waited for the Department to specifically say, "Shut down your business, you're not getting a license"?
MR. CONLEY: The -- the petitioner would have needed to have incurred an injury because of the regulation. Whether that be that he was denied an application or that he was granted an application but felt that the compliance costs were too high and the resulting financial losses were an injury, to then challenge the aspects of the regulation he objected to. But what he or -- yes, that the Department in some way compelled him to shut down the business.
THE COURT: So what you're saying on behalf of the respondent is that there would have had to be an affirmative act on behalf of the Department to trigger his standing. In other words, the Department would have had to flatout deny him the license or grant him the license but make it feasibly impossible for him to continue. And, therefore, by that act on behalf of the Department it would have triggered his ability to then proceed forward.
MR. CONLEY: Not -- not exactly, Your Honor. The -- the Department's position is that he -- the petitioner is trying to get standing in this case with these facts by litigating a decision that had never been rendered in the first place.
THE COURT: Well, because he's trying to say, "Listen, why do I have to wait to suffer the brunt in full force of this injury? You're going to deny me regardless, so let me go ahead and proceed this way." I mean, are you telling me that he would have had to have waited for the Department to flatout say, "You're denied a license" or "You're granted a license, but these are the things that you needed to do"?
MR. CONLEY: He
THE COURT: In other words, what the Department did instead was it gave him -- they sent him a letter, a correspondence that invited him to conversate more or to have, you know, a further discussion as to what things he could do.
MR. CONLEY: The -- the Department sent a letter saying that it was impossible based on the information provided the Department, it was in the dark, it has no idea what Chino, Limited is and whether there would need to be a license. And the petitioner would need to show some kind of injury that resulted from the regulation. And there is -- there is no connection to the injury that they are pointing to here.
THE COURT: How is him not shutting down this business a direct response to a challenge to the regulation itself?
MR. CONLEY: Because any individual could shut down a business and then blame it on some law or regulation. There needs to be some kind of cause and effect, some type of connection between the harm you're professing to have suffered and the law or regulation that you're challenging.
THE COURT: Are you suggesting that he just randomly decided to shut down the business just because?
MR. CONLEY: It appears that the petitioner would prefer to challenge the validity of the regulation in court based on his impressions of how the regulation might have impacted him in the future.
THE COURT: Okay. Do you have anything to add or respond, a brief reply with respect to the other issues that were raised?
MR. CONLEY: Yes, Your Honor. Just briefly on the point of the Department's authority under the Financial Services Law: The Department was created in the aftermath of the 2008 financial crisis and in - - through the enactment of the Financial Services Law. And in enacting the Financial Services Law the legislature tasked the -- this newly formed department with the enforcement of the Banking Insurance and Financial Services Laws and provided a broad grant of authority to regulate new financial services and products and to ensure the continued safety and soundness of the banking financial insurance industries. The petitioner and virtual currency business activity clearly fits within this. The petitioner's cramped reading of the Financial Services Law ignores the broad consumer protection mandate that's clear on the face of the statute. The virtual currency business activity that is regulated under this regulation is clearly a financial product or service. It's essentially a digital form of money, a medium of exchange that acts as a denominator of value and it can be used to conduct financial transactions, such as buying and selling goods and services. The petitioner maintains and tries to draw a distinction arguing that virtual currency business activity cannot be a financial product or service because it does not involve fiat currencies.