The issue of whether virtual currencies can be legally deemed commodities is an important one, at least as far as the U.S. Commodity Futures Trading Commission (CFTC) is concerned. The regulator only has jurisdiction over commodities, and without supportive interpretations of the law, they are powerless to act.
However, the CFTC has become increasingly aggressive towards alleged crypto scams in recent months, the latest concerning a virtual currency called My Big Coin (MBC), in which the regulator has been proactive in bringing enforcement action against its promoters.
This week, a court in Massachusetts has backed the CFTC in their interpretation of virtual currencies as commodities (and thus within the regulator’s jurisdiction), in the process dismissing a petition from the coin’s promoters to have the case set aside, Finance Feeds reported.
My Big Coin Pay, the company behind MBC, had argued that virtual currencies were not commodities as commonly defined, and as such, the CFTC had no jurisdiction in their case against Randall Crater of My Big Coin.
The complaints concern allegations of fraud and/or manipulation in connection with the virtual currency, and could see Crater and the other named defendants subject to further enforcement action at the hands of the CFTC. Now, with the court ruling against the defendants, the verdict comes as the latest judgement to support the CFTC’s position.
Summing up, Judge Rya W. Zobel said that there was no question CFTC had sufficiently satisfied the court that My Big Coin was in fact a commodity.
According to the ruling, “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.”
The allegations primarily focus on misrepresentations around My Big Coin, which was marketed as a fully functional virtual currency, along with a number of other falsehoods, including representations that My Big Coin was backed by gold and that it could be used for payment in any location that accepts Mastercard.
The CFTC further alleged the group intentionally switched the price of their cryptocurrency, in such a way as to mimic an organic market, with those caught up in the scheme subsequently unable to access their funds.
With the recent ruling falling in favour of the CFTC, the regulator now has a renewed impetus to tackle cryptocurrency scams.
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