Federal Court Confirm Cryptocurrencies Are Commodities in the US
Cryptocurrencies are commodities, according to 4 court cases involving the US Commodity Futures Trading Commission (CFTC). In her ruling, the judge cited 3 other crypto-related cases that arrive at the same conclusion. A federal judge recently ruled that a token is a commodity, certifying the CFTC’s authority to prosecute fraud and manipulation in the crypto space.
Cryptocurrencies Are Commodities
Federal Judge Rya Zobel ruled last week that the US derivatives watchdog has the authority to prosecute fraud and manipulation in the crypto space. The case involves My Big Coin Pay Inc. and a token called MBC. In her decision document, Zobel cited 3 other crypto-related cases involving the CFTC where cryptocurrencies are considered commodities. The CFTC announced: Federal court finds that virtual currencies are commodities, Senior Judge Rya W. Zobel of the US District Court for the District of Massachusetts, entered an order holding that the CFTC has the power to prosecute fraud involving virtual currency.
CFTC Director of Enforcement, James Mcdonald, emphasized that this is an important ruling that confirms the authority of the CFTC to investigate and combat fraud in the virtual currency markets. The judge ruled that it is a commodity and the CFTC has the authority to pursue fraud charges against the coin issuer and its founder. In the My Big Coin Pay Inc. case, the defendants argued that MBC is not a commodity because it does not have future contracts or other derivatives trading on it.
The CFTC vs. Mcdonnell Case
There was another court case that recognizes the authority of the CFTC over cryptocurrencies. In CFTC vs. Mcdonnell, Judge Weinstein in the Eastern District of New York sided with the derivatives watchdog against Patrick Mcdonnell and his company, Cabbage Tech. Corp. dba Coin Drop Markets. This case recognizes the broad definition of commodity under the CEA and also that the CFTC has the power to prosecute fraud with respect to commodities including virtual currencies, the agency described. Judge Zobel explained that the Mcdonnell case shows: Virtual currencies can be regulated by CFTC as a commodity.
The Bitfinex Case
Zobel also referenced the June 2016 case of Bfxna Inc. dba Bitfinex. The CFTC fined Bitfinex $75k at the time for offering illegal off-exchange financed retail commodity transactions and failing to register as a futures commission merchant. The Bitfinex case shows that cryptocurrencies are properly defined as commodities.
The Coinflip Case
Another case which Zobel referenced is the very 1st case in which BTC and other cryptocurrencies were recognized as commodities. This September 2015 case involves BTC options trading platform operator Coinflip Inc. and its CEO. In this 1st action against an unregistered BTC options trading platform, the CFTC holds that BTC and other virtual currencies are a commodity covered by the Commodity Exchange Act, noting: In the order, the CFTC for the 1st time finds that BTC and other virtual currencies are properly defined as commodities.