US Judge Rules: Cryptocurrency is a Commodity for Purposes of CFTC Case

An American judge has decided that that crypto-tokens can be classed as commodities for the purposes of a criminal case.

US District Judge Rya Zobel said on Wednesday that the Commodity Futures Trading Commission's case against My Big Coin Pay Inc, can go ahead. The latter's lawyers had argued that the former had no authority because 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 are not commodities. This decision is important because of the precedent set.

My Big Coin Pay vs. the Commodity Futures Trading Commission

My Big Coin Pay is a cryptocurrency company which the CFTC alleges to have run a scam.

It is the company behind ‎MyBigCoin.com, a website with an online wallet to store cryptocurrency and a digital exchange to trade them. Founded in December 2013, according to the website, it also has its own cryptocurrency, MBC, which it sold in an ICO. It made a total of approximately $6 million, from 28 investors.

The website promises one percent interest for users that keep their wallets open (to mine through staking). It also claims to be based in Wyoming.

The CFTC complaint, however, lists the company's base as Las Vegas. It accuses owners Randall Crater of New York and Mark Gillespie of Michigan of using the $6 million to buy themselves fancy things. Money that customers did receive was taken from other customers, Ponzi-style.

The money was raised through a number of fictitious claims, according to the complaint. These included that MBC was backed by gold, that MBC was actively trading on several cryptocurrency exchanges, and that the company had partnered with MasterCard.

No Authority?

The watchdog filed charges against My Big Coin Pay in January 2018. Money held by the defendants was frozen, and several other persons, who were also involved in the scheme, also had their access blocked. A restraining order prohibits involved persons from destroying or altering any records.

The case came to court in June.

Crater's lawyers argued that the CFTC had no authority over the case.

“Our argument boils down to the fact that because My Big Coin does not have future contracts or other derivatives trading on it, it is not a commodity,” said Katherine Cooper, defending.

Can't Have Cake and Eat It Too

US District Judge Rya Zobel decided that MBC can be considered a commodity because it is a cryptocurrency like Bitcoin Bitcoin While some may still be wondering what is Bitcoin, who created Bitcoin, or how does Bitcoin work, one thing is certain: Bitcoin has changed the world.No one can remain indifferent to this revolutionary, decentralized, digital asset nor to its blockchain technology.In fact, we’ve gone a long way ever since a Florida resident Laszlo Hanyecz made BTC’s first official commercial transaction with a real company by trading 10,000 Bitcoins for 2 pizzas at his local Papa John’s.One could now argue that While some may still be wondering what is Bitcoin, who created Bitcoin, or how does Bitcoin work, one thing is certain: Bitcoin has changed the world.No one can remain indifferent to this revolutionary, decentralized, digital asset nor to its blockchain technology.In fact, we’ve gone a long way ever since a Florida resident Laszlo Hanyecz made BTC’s first official commercial transaction with a real company by trading 10,000 Bitcoins for 2 pizzas at his local Papa John’s.One could now argue that Read this Term, and Bitcoin is traded via exchanges, and there are futures contracts linked to it.

“That is sufficient, especially at the pleading stage, for plaintiff to allege that My Big Coin is a ‘commodity’ under the Act,” wrote Zobel.

The outcome is of interest to many because the definition of cryptographic tokens under US law is a hot topic. This week, a large number of people from cryptocurrency-related companies attended a congressional hearing, and the overwhelming message was a desire for regulatory certainty.

This has been lacking in the past because authorities have not decided if crypto-tokens are securities or assets, or both.

Cooper expressed disappointment in the decision. She said to Reuters: "Now that we are moving past the motion to dismiss phase of the case, we look forward to challenging the CFTC’s ability to prove many of the factual allegations in the complaint. Among those factual allegations are those which speak to the relatedness of bitcoin and My Big Coin and therefore the CFTC’s jurisdiction."