A week ago, the US District Court for the District of Massachusetts stated that the Commodity Futures Trading Commission (CFTC) has the authority to bring to prosecute fraud involving virtual currency and denying the defendants’ motion to dismiss the CFTC’s amended complaint.
In the charges brought forward by the CFTC, the regulatory body had stated one particular cryptocurrency My Big Coin (MBC), was a commodity under the Commodity Exchange Act (CEA). It had said, “MBC is a virtual currency and it is undisputed that there is futures trading in virtual currencies (specifically involving Bitcoin).” The Court, upholding the CFTC’s version said that commodities could be extended to a host of specifically enumerated agricultural products as well as ‘all other goods and articles . . . and all services rights and interests . . . in which contracts for future delivery are presently or in the future dealt in.” It added that commodities signal specific categories and not specific items.
In an official press release, the CFTC said, “This is an important ruling that confirms the authority of the CFTC to investigate and combat fraud in the virtual currency markets. This ruling, like the one in McDonnell from Judge Weinstein in the Eastern District of New York, recognizes the broad definition of commodity under the CEA, and also that the CFTC has the power to prosecute fraud with respect to commodities including virtual currencies. We will continue to police these markets in close coordination with our sister agencies.”
This is not the first time that the CFTC has brought a suit against errant, potentially fraudulent companies. In the past it has also filed charges against 1 Broker. This nugget of information came to light when last week, the Securities and Exchange Commission (SEC) filed charges against the same company for allegedly violating the federal securities laws in regard to securities-based swaps that are funded by bitcoin.
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