US District Judge Jack Weinstein has reiterated in a judgment against Patrick McDonnell and his company Coin Drop Markets, that virtual currencies like Bitcoin can be regulated as commodities by the US Commodity Futures Trading Commission, (CFTC).
The CFTC, which is tasked with regulating commodity, futures and derivatives markets, first determined that virtual currencies, also known as cryptocurrencies, are commodities in 2015.
This case and the judgment laid down by Weinstein has reiterated the point that digital currencies fall under the control of the CFTC.
Coin Drop Markets
This precedent was set in the ruling against Patrick McDonnell’s company Coin Drop Markets stating that the CFTC had standing to bring a fraud lawsuit against the crypto company. Part of the ruling has seen McDonnell being barred from engaging in commodity transactions.
McDonnell and his company fraudulently offered customers virtual currency trading advice, according to the lawsuit announced in January.
In fact, it was reported that the customers never received the advice they paid for and that Coin Drop Markets was never registered with the CFTC. It said that McDonnell took down the company’s website and stopped responding to customers.
Plain meaning of commodity
It was explained by Weinstein, who upheld the decision and interpretation of the word commodity, to hold the plain meaning of the word and thus the CFTC had broad leeway to interpret the federal law regulating commodities.
Regulations surrounding cryptocurrencies are still in their infancy, and this means there is a lot of feeling out that is needed. So, when judgments like these are made, and precedents start being set, digital currencies start to find their place in the legal and regulatory ecosystem.
Tomiwabold Olajide
Godfrey Benjamin
Dan Burgin
Vladislav Sopov