In a significant development, the Massachusetts District Court has ruled that cryptocurrencies are nothing but commodities. As a result, the court has not allowed defendants motion to dismiss a case filed by Commodity Futures Trading Commission (CFTC). Senior Judge Rya Zobel has issued an order that the commodity regulator has enough power to prosecute fraud committed by the defendants in respect of virtual assets.
CFTC Director of Enforcement, James McDonald, viewed the court ruling as an important one. He believes that this has confirmed the regulator’s authority to not only investigate but also fight frauds being committed by various sections in the digital coin markets. The latest order is much like the one in McDonnell recognizing the wider commodity definition as per the Commodity Exchange Act (CEA) and that the commodity regulator is enjoying the power to prosecute fraud.
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He is categorical that the CFTC will continue to monitor the cryptocurrency markets in association with its sister agencies. The court is convinced about the arguments put forth by CFTC against My Big Coin (MBC), which is in the midst of controversy. The commodity regulatory felt that MBC is a commodity as per the CEA and pointed out that the company is a virtual asset and that there was no dispute about its futures trading.
The federal court is not convinced about the arguments placed by the defendants on the regulator’s authority on MBC. The court held the view that the language has explicitly prohibited fraud even without the market manipulation allegations. The ruling might not be surprising since earlier too; the court has held similar views.
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The CFTC has charged defendants, My Big Coin, My Big Coin Pay, Michael Kruger, John Roche, Gillespie, Randall and Kimberly Renee Benge of committing frauds with the help of digital currencies. The regulator has alleged that the company has managed a fraudulent virtual asset scheme where they encouraged customers to buy MBC, a fully-functioning digital coin. The agency has sought civil monetary penalties, compensation, rescission, and a ban on registration and trading.
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