US Judge Rules Supports CFTC’s Actions Against Virtual Currency Scams

US Judge Rules Supports CFTC’s Actions Against Virtual Currency Scams

General News
September 27, 2018 by Sandra Onyeiwu
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A U.S. federal district judge has ruled that cryptocurrencies should be treated as commodities and that their policing should fall under the purview of the Commodity Futures Trading Commission (CFTC). This decision should allow the Commodity Futures Trading Commission (CFTC) to continue to police virtual currency frauds, regulation of which has fallen among several different
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A U.S. federal district judge has ruled that cryptocurrencies should be treated as commodities and that their policing should fall under the purview of the Commodity Futures Trading Commission (CFTC).

This decision should allow the Commodity Futures Trading Commission (CFTC) to continue to police virtual currency frauds, regulation of which has fallen among several different agencies.

Federal Judge Rya Zobel has ruled that the CFTC should have oversight of cryptocurrency fraud cases. This will allow the agency to proceed with a $6 million case against My Big Coin Pay Inc., which claimed to sell a gold-backed cryptocurrency and allegedly defrauded 28 investors.

The CFTC had sued tech entrepreneur Randall Crater, and other relief defendants tied to his firm, for allegedly violating the Commodity Exchange Act (CEA) by manipulating investors to buy My Big Coin (MBC) via a series of misleading or false statements.

Crater’s lawyers had attempted to dismiss the CFTC’s case, arguing that the token escaped the regulator’s enforcement jurisdiction as it was neither a tangible good or service on which futures contracts are based.

The defendants’ principal argument is that CFTC fails to state a claim because My Big Coin (MBC), the allegedly fraudulent virtual currency involved in the scheme, is not a “commodity” within the meaning of the Act.

The Judge denied the defendants’ motion to dismiss the case against them, explaining that virtual currencies are commodities under the CEA, concluding that:

“Here, the amended complaint alleges that My Big Coin is a virtual currency and it is undisputed that there is futures trading in virtual currencies (specifically involving Bitcoin). That is sufficient, especially at the pleading stage, for plaintiff to allege that My Big Coin is a ‘commodity’ under the Act.”

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