US Judge Rules to Bring Purported Crypto Phony Under CFTC Supervision
A senior U.S District (Massachusetts) Court Judge, Rya Wickert Zobel, ratified on Wednesday, September 26, that the U.S. Commodity Futures Trading Commission (CFTC) may further push its supervision of all digital currencies.
On January 24 this year, the CFTC announced through a press release that it had officially filed “a federal court enforcement action under seal on January 16, 2018, charging product scam and misappropriation related to the ongoing solicitation of users for a Crypto called My Big Coin (MBC).”
The CFTC had entreated and sued technology entrepreneur Randall Crater, and several other defendants tied to his company, for allegedly violating the Commodity Exchange Act (CEA) by influencing investors to purchase MBC through false statements. Almost 28 potential investors are alleged to have been defrauded of a general $6 million, thinking that MBC was “backed by gold” and strongly traded on different giant exchanges.
The defendants are also purported to have “arbitrarily” engineered the value of MBC to mimic the price swings of a legitimate digital currency, regardless of investors allegedly themselves being unable to withdraw funds or buy/sell their MBC crypto holdings.
The Crypto World
Randall’s lawyers had tried to red-card the CFTC’s case, saying that the crypto circumvented the regulator’s enforcement jurisdiction since it was neither a physical good nor a service where futures contracts are grounded.
However, judge Wickert
ruled in favor of grouping both MBC and BTC with which Randall had allegedly compared the token as Cryptos in which “contracts for future delivery are […] presently dealt in.” Randall ruled that a product for the issues of CEA is wider than any specific kind or brand of that product, ending 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.”
Judge Randall is said to have deferred to the previous precedent set by an earlier case from March, where Jack B Weinstein, a New York Judge ruled that the CFTC had all that it takes to regulate the commercial activities of another, purportedly “bold and vicious” Cryptocurrency-related scam from a company called Cabbage Tech Corp.
Judge Weinstein’s ruling ratified the applicability of federal commodity regulations to BTC under the CFTC’s supervision, resulting in a successful court order which permanently stopped the activities of Cabbage Tech Corp last month.