An American judge has decided that that crypto-tokens can be classified as commodities for the purpose 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 they had no authority because cryptocurrencies are not commodities. This decision is important because of the precedent set.
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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. It also has its own cryptocurrency, MBC, which is sold in an ICO. It made a total of approximately $ 6 million, from 28 investors.
The website promises 1 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. Ponzi-style.
The money was raised through a number of fictitious claims, according to the complaint. These included MBC was backed by gold, that MBC was actively trading on several cryptocurrency exchanges, and that the company had partnered with MasterCard.
The watchdog filed charges against My Big Coin Pay in January 2018. They were kept in the scheme, they had their access blocked. A restraining order.
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The case came to court in June.
Crater's lawyers argued that the CFTC had no authority over the case.
"It is not a future contract or other derivatives trading on it," said Katherine Cooper, defending.
Can not have cake and eat it too
US District Judge Rja Zobel decided that MBC can be considered a commodity because it is a cryptocurrency like Bitcoin, and Bitcoin is traded via exchanges, and there are futures contracts linked to it.
"That is sufficient, especially at the pleading stage, for which My Big Coin is a commodity under the Act," wrote Zobel.
Cryptographic tokens under the law. This week, a large number of people from cryptocurrency related companies attended a conference, and the overwhelming message was a desire for regulatory certainty.
These have been lacking in the past due to the fact that they are not 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, we look forward to challenging the CFTC's ability to prove many of the factual allegations in the complaint. These are the allegations that are related to bitcoin and My Big Coin and therefore the CFTC's jurisdiction. "