US Federal Judge: Cryptocurrencies are Commodities
- Judge Jack Weinstein's ruling has cleared the pathway for the CFTC to take action against Coin Drop Markets.
A United States federal judge has ruled that the US Commodity Futures Trading Commission (CFTC) can legally classify and regulate Cryptocurrencies Cryptocurrencies By using cryptography, virtual currencies, known as cryptocurrencies, are nearly counterfeit-proof digital currencies that are built on blockchain technology. Comprised of decentralized networks, blockchain technology is not overseen by a central authority.Therefore, cryptocurrencies function in a decentralized nature which theoretically makes them immune to government interference. The term, cryptocurrency derives from the origin of the encryption techniques that are employed to secure the netw By using cryptography, virtual currencies, known as cryptocurrencies, are nearly counterfeit-proof digital currencies that are built on blockchain technology. Comprised of decentralized networks, blockchain technology is not overseen by a central authority.Therefore, cryptocurrencies function in a decentralized nature which theoretically makes them immune to government interference. The term, cryptocurrency derives from the origin of the encryption techniques that are employed to secure the netw Read this Term as commodities, according to a new report from Reuters.
The US district judge responsible for the ruling is Brooklyn’s Jack Weinstein, who declared that the CFTC had legitimate legal standing to go forward with a fraud lawsuit against New York resident Patrick McDonnell. The CFTC originally filed a complaint against McDonnell and his company, Coin Drop Markets, in January of 2018.
The complaint alleged that McDonnell had been selling fraudulent investment advice, or rather, that he had been selling something that didn’t exist--reportedly, customers never got the advice that they paid for. Coin Drop was also never registered with the CFTC.
The ruling was made officially on March 6, 2018, following a hearing in which Judge Weinstein declared that the CFTC had found “a reasonable likelihood that without an injunction the defendants will continue to violate the CEA [Commodity Exchange Act].”
The Memorandum and Order containing the ruling states that “the court finds the plaintiff has made a preliminary prima facie showing that the defendants committed fraud by misappropriation of investors’ funds and misrepresentation through false trading advice and promised future profits.”
Reuters reported that McDonnell--who represented himself in court--declined to comment on the ruling.
Murky Crypto Legislation in the US
While this latest ruling could prove to be an important plot point in the narrative that is the increasingly complicated saga of crypto legislation in the United States, the federal government has by and large held off from making any major rulings on crypto Regulation Regulation Like any other industry with a high net worth, the financial services industry is tightly regulated to help curb illicit behavior and manipulation. Each asset class has its own set of protocols put in place to combat their respective forms of abuse.In the foreign exchange space, regulation is assumed by authorities in multiple jurisdictions, though ultimately lacking a binding international order. Who are the Industry’s Leading Regulators?Regulators such as the UK’s Financial Conduct Authority ( Like any other industry with a high net worth, the financial services industry is tightly regulated to help curb illicit behavior and manipulation. Each asset class has its own set of protocols put in place to combat their respective forms of abuse.In the foreign exchange space, regulation is assumed by authorities in multiple jurisdictions, though ultimately lacking a binding international order. Who are the Industry’s Leading Regulators?Regulators such as the UK’s Financial Conduct Authority ( Read this Term.
This could change, and quickly--just last week, the Wall Street Journal reported that the SEC had submitted “scores of subpoenas” to crypto firms around the country.
However, the state of New York has developed a regulatory framework of its own. New York based firms that deal in crypto are not required to gain money transmitter licenses. Instead, they are technically required to apply for licensure under New York’s ‘BitLicense’ program, although the program has been criticized for not being well-executed or properly enforced.
In any case, a nation-wide crackdown on fraudulent activity associated with crypto is evident. McDonnell is the latest, but he certainly won't be the last.
A United States federal judge has ruled that the US Commodity Futures Trading Commission (CFTC) can legally classify and regulate Cryptocurrencies Cryptocurrencies By using cryptography, virtual currencies, known as cryptocurrencies, are nearly counterfeit-proof digital currencies that are built on blockchain technology. Comprised of decentralized networks, blockchain technology is not overseen by a central authority.Therefore, cryptocurrencies function in a decentralized nature which theoretically makes them immune to government interference. The term, cryptocurrency derives from the origin of the encryption techniques that are employed to secure the netw By using cryptography, virtual currencies, known as cryptocurrencies, are nearly counterfeit-proof digital currencies that are built on blockchain technology. Comprised of decentralized networks, blockchain technology is not overseen by a central authority.Therefore, cryptocurrencies function in a decentralized nature which theoretically makes them immune to government interference. The term, cryptocurrency derives from the origin of the encryption techniques that are employed to secure the netw Read this Term as commodities, according to a new report from Reuters.
The US district judge responsible for the ruling is Brooklyn’s Jack Weinstein, who declared that the CFTC had legitimate legal standing to go forward with a fraud lawsuit against New York resident Patrick McDonnell. The CFTC originally filed a complaint against McDonnell and his company, Coin Drop Markets, in January of 2018.
The complaint alleged that McDonnell had been selling fraudulent investment advice, or rather, that he had been selling something that didn’t exist--reportedly, customers never got the advice that they paid for. Coin Drop was also never registered with the CFTC.
The ruling was made officially on March 6, 2018, following a hearing in which Judge Weinstein declared that the CFTC had found “a reasonable likelihood that without an injunction the defendants will continue to violate the CEA [Commodity Exchange Act].”
The Memorandum and Order containing the ruling states that “the court finds the plaintiff has made a preliminary prima facie showing that the defendants committed fraud by misappropriation of investors’ funds and misrepresentation through false trading advice and promised future profits.”
Reuters reported that McDonnell--who represented himself in court--declined to comment on the ruling.
Murky Crypto Legislation in the US
While this latest ruling could prove to be an important plot point in the narrative that is the increasingly complicated saga of crypto legislation in the United States, the federal government has by and large held off from making any major rulings on crypto Regulation Regulation Like any other industry with a high net worth, the financial services industry is tightly regulated to help curb illicit behavior and manipulation. Each asset class has its own set of protocols put in place to combat their respective forms of abuse.In the foreign exchange space, regulation is assumed by authorities in multiple jurisdictions, though ultimately lacking a binding international order. Who are the Industry’s Leading Regulators?Regulators such as the UK’s Financial Conduct Authority ( Like any other industry with a high net worth, the financial services industry is tightly regulated to help curb illicit behavior and manipulation. Each asset class has its own set of protocols put in place to combat their respective forms of abuse.In the foreign exchange space, regulation is assumed by authorities in multiple jurisdictions, though ultimately lacking a binding international order. Who are the Industry’s Leading Regulators?Regulators such as the UK’s Financial Conduct Authority ( Read this Term.
This could change, and quickly--just last week, the Wall Street Journal reported that the SEC had submitted “scores of subpoenas” to crypto firms around the country.
However, the state of New York has developed a regulatory framework of its own. New York based firms that deal in crypto are not required to gain money transmitter licenses. Instead, they are technically required to apply for licensure under New York’s ‘BitLicense’ program, although the program has been criticized for not being well-executed or properly enforced.
In any case, a nation-wide crackdown on fraudulent activity associated with crypto is evident. McDonnell is the latest, but he certainly won't be the last.