A U.S. judge has sided with the Commodity and Futures Trading Commission (CFTC) in a lawsuit involving an allegedly fraudulent crypto investment scheme, ruling that the cryptocurrencies involved are commodities for the purpose of the case.
As CoinDesk reported at the time, the CFTC charged two individuals and a Las Vegas-based business called My Big Coin Pay over the alleged cryptocurrency-related scam back in January.
The commission accused the pair, Randall Crater and Mark Gillespie, as well as the firm, of taking customer funds and siphoning that money into their personal accounts. Additionally, they allegedly used those funds âfor personal expenses and the purchase of luxury goods.â
Subsequently, the defendants filed a motion to dismiss the case on the grounds that the cryptos involved are not commodities and, as such, the CFTC has no jurisdiction over the case.
However, Judge Rya W. Zobel from the district court of Massachusetts has now agreed with the counterarguments made by the CFTC and denied the motion to dismiss on Wednesday. As a result, the case will continue.
The defendants contended that My Big Coin â which Crater and Gillespie marketed as a cryptocurrency that can be mined and traded â did not deal with any âcontracts for future delivery.â Therefore, itâs not a commodity under the Commodity Exchange Act (CEA), the two argued.
However, the CFTC refuted that contention, stating:
âA âcommodityâ for purposes of [the CEA definition] is broader than any particular type or brand of that commodity.â
âPointing to the existence of bitcoin futures contracts, [the CFTC] argues that contracts for future delivery of virtual currencies are âdealt inâ and that My Big Coin, as a virtual currency, is therefore a commodity,â the CFTC continued.
âThe text of the statute supports plaintiffâs argument. The Act defines âcommodityâ generally and categorically, ânot by type, grade, quality, brand, producer, manufacturer, or form,'â the Judge wrote.
The decision is the latest instance in which cryptocurrencies involved in an alleged fraud lawsuit have been determined by a U.S. judge to be commodities that are subject to the jurisdiction of the CFTC.
CoinDesk reported in March that another U.S district judge also backed the financial watchdog and made a similar decision in a fraud lawsuit concerning a firm called CabbageTech.
The court later ruled in favor of the regulators, finding that CabbageTech and its proprietor, Patrick McDonnell, had been running a fraudulent operation and imposing a $1 million fine in penalties and restitution, Bloomberg reported.
My Big Coin by CoinDesk on Scribd
Gavel and U.S. flag image via Shutterstock
