US judge rules Cryptocurrencies should be legally viewed as Commodities
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The Commodity Futures Trading Commission (CTFC) sued technology entrepreneur Randall Crater and the company he founded for allegedly perpetrating a $6 million fraud on investors in My Big Coin, an obscure digital currency.
The accusations against Crater include the theft of $6 million from 28 investors who were sold the coin on the basis that it was like Bitcoin, and then claiming that it was backed by gold.
Crater’s lawyer attempted to have the case dismissed by arguing that the CTFC didn’t have the authority to judge cases involving digital currencies, claiming that such assets are neither a service nor a tangible good and thus was out of the jurisdiction of the CTFC.
However, US District Judge Rya Zobel stated that My Big Coin meets the Commodity Exchange Act’s definition of a commodity because the law doesn’t define commodities in specific types or brands, but rather in broad categories.
Zobel found that since My Big Coin and Bitcoin can be defined as virtual currencies and Bitcoin has futures that trade on US exchanges, the CTFC has a right to judge cases involving cryptocurrencies.
“That is sufficient, especially at the pleading stage, for plaintiff to allege that My Big Coin is a ‘commodity’ under the Act,” she wrote in Wednesday’s decision.
The resulting ruling means the case may now move forward.
“We are disappointed in the result,” said Crater’s lawyer Katherine Cooper in an email. “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.”