US Judge Rules to Bring Crypto Scam Under CFTC Oversight

US Judge Rules to Bring Alleged Cryptocurrency Scam Under CFTC Oversight

A U.S. federal district judge has ruled that an allegedly deceptive crypto token fulfills the definition of a commodity, bringing the situation under regulators’ purview, Finance Feeds reports September 27.

Judge Rya W. Zobel of the Massachusetts District Court ruled Sept. 25 against a motion to dismiss a case that had been established from the Commodity Futures Trading Commission (CFTC) against an allegedly fraudulent crypto scheme called”My Big Coin Pay Inc.,” reported to have been established in the state of Nevada.

The CFTC had sued tech entrepreneur Randall Crater, and other aid defendants tied to his firm, for allegedly violating the Commodity Exchange Act (CEA) by manipulating shareholders to purchase My Big Coin (MBC) via a string of false or deceptive statements. A total of 28 investors have been supposed to have been defrauded of a collective $6 million, was led to feel that MBC has been”backed by gold” and was being”actively traded” on various crypto exchanges.

The defendants are further alleged to have”arbitrarily” manipulated the value of MBC to dissimulate the price fluctuations of a valid cryptocurrency, despite investors supposedly themselves being not able to withdraw funds or exchange their own MBC nominal holdings.

Crater’s lawyers had attempted to discount the CFTC’s case, arguing that the token escaped the operator’s enforcement authority as it was neither a tangible good nor service on which futures contracts are based.

However, Judge Zobel ruled in favor of categorizing both MBC and Bitcoin (BTC) — with which Crater had purportedly compared the token — as virtual monies in which”contracts for future delivery are […] presently dealt in.” The judge ruled that a”product” for the purposes of CEA is broader than any Specific type or brand of that commodity, 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.”

Judge Zobel is reported to have called the precedent set with a previous instance from March, where New York district judge Jack B. Weinstein ruled that the CFTC had the ability to regulate the industrial operations of a different, supposedly”daring and barbarous” crypto-related fraud by a company called CabbageTech Corp..

Judge Weinstein’s ruling affirmed the applicability of national product regulations to Bitcoin beneath the CFTC’s supervision, resulting in a successful court order that permanently resisted the surgeries of CabbageTech Corp. that August.

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