The US Commodity Futures Trading Commission (CFTC) is being challenged in court docket over its oversight of cryptocurrencies. The defendants argue that their tokens aren’t commodities, without a futures contracts, which the CFTC regulates. The consequence of this situation may impact the Commission’s talent to police all long term crypto frauds.
Challenging the CFTC’s Power
The energy of the CFTC over cryptocurrencies has reportedly been challenged in court docket. The case involving My Big Coin may decide whether or not the derivatives regulator “has the authority to combat fraud associated with cryptocurrencies,” Reuters reported on Wednesday.
Katherine Cooper, legal professional for the protection, defined that the CFTC will have to no longer have jurisdiction in this situation, mentioning that “our argument boils down to the fact that because My Big Coin does not have future contracts or other derivatives trading on it, it is not a commodity,” and does no longer fall beneath the Commodity Exchange Act in step with which the CFTC is the regulator.
The information outlet elaborated:
Lawyers gazing the case say a ruling in opposition to the CFTC may impact its talent to police digital forex frauds as the one one on which futures contracts are traded in the United States is bitcoin.
Gregory Kaufman, a legal professional with Eversheds Sutherland, believes that the end result of this situation “would have a chilling effect on the CFTC’s application of its powers in this area.”
Other than My Big Coin, the Commission has introduced 8 cryptocurrency-related instances to this point, the newsletter famous, including that U.S. District Judge Rya Zobel in Boston is about to listen to the My Big Coin case on Thursday.
About My Big Coin Case
The case started in January when the CFTC sued Randall Crater and the corporate he based known as My Big Coin Pay Inc. The information outlet described, “The CFTC says the defendants misappropriated $6 million from 28 customers they lured by naming their virtual currency [My Big Coin] to sound like bitcoin and further claiming it was backed by gold.”
The Commission was once given the authority over crypto in March when U.S. District Judge Jack Weinstein in Brooklyn “ruled for the first time that virtual currencies can be regulated by the agency as a commodity,” the newsletter conveyed. However, Crater’s legal professionals argued:
The CFTC has no authority over the digital forex as it [My Big Coin] isn’t a commodity like wheat or cotton or a provider this is traded the use of futures contracts, the everyday center of attention of the company’s enforcement regime.
Nonetheless, Neal Kumar, a legal professional at Willkie Farr & Gallagher, was once quoted explaining that “Crater may still lose because the Commodity Exchange Act defines services as commodities not just when they currently have futures contracts associated with them but in the future could.”
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Images courtesy of Shutterstock and CFTC.
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