A US federal district judge has ruled that a supposedly fraudulent cryptographic token meets the definition of merchandise, bringing the case under the responsibility of regulators, the Financial Feed reports of 27 September.
Judge Rya W. Zobel of the Massachusetts District Court ruled on September 25 against a motion to dismiss a case that was launched by the Commodity Futures Trading Commission (CFTC) against an alleged cryptic scheme known as "My Big Coin Pay Inc. , "Reported to be based in the state of Nevada.
The CFTC had sued the technological entrepreneur Randall Crater and other defendants related to his company, allegedly violating the Commodity Exchange Act (CEA) by manipulating investors to buy My Big Coin (MBC) through a series of misleading or false statements . It is assumed that a total of 28 investors have been defrauded by a collective capital of $ 6 million, having been led to believe that MBC was "supported by gold" and that it was "actively traded" on various crypto-exchanges.
It is also believed that the defendants arbitrarily manipulated the value of MBC to conceal the price fluctuations of a legitimate cryptocurrency, despite the fact that they are presumably unable to withdraw funds or exchange their holdings in MBC.
Crater's lawyers had attempted to reject the CFTC case, claiming that the token had escaped the executive jurisdiction of the regulatory authority as it was neither a tangible asset nor a service on which forward contracts are based.
Nevertheless, Judge Zobel has ruled in favor of the categorization of MBC and Bitcoin (BTC) – with which the Crater had presumably compared the token – as virtual currencies in which "contracts for future delivery are […] "The judge ruled that a" commodity "for the purpose of the EAA is wider than any particular type or brand of such goods, concluding that:
"Here, the modified claim claims that My Big Coin is a virtual currency and it is clear that there are futures exchanges in virtual currencies (especially with Bitcoin) .This is sufficient, especially in the phase of pleading, because the plaintiff asserts that My Big Coin is a "commodity" under the Act ".
It is said that Judge Zobel referred to the precedent set by a previous case in March, in which New York District Judge Jack B. Weinstein ruled that the CFTC had the authority to regulate a Another cryptography allegedly "audacious and vicious" fraud related to a company known as CabbageTech Corp.
Judge Weinstein's ruling confirmed the applicability of the federal commodity regulations in Bitcoin under the supervision of the CFTC, leading to a successful judicial order that permanently blocked the operations of CabbageTech Corp. in August.