CFTC vs My Big Coin and case law

A little-known cryptocurrency called My Big Coin is now the focus of lawyers studying a case that could determine whether the Commodity Futures Trading Commission (CFTS) has the powers it needs to crack down on scammers in the cryptocurrency world.

В январе, на фоне борьбы с криптовалютными мошенничествами, регулятор США подал в суд на предпринимателя Рэндалла Кратера и на компанию, которую он основал. The regulator claims that the company's founder deliberately deceived My Big Coin buyers, receiving $6 million. 

Lawyers not involved in the lawsuit say the Crater case will be a game-changer for the CFTC's oversight of cryptocurrencies that operate without the backing of central banks. 

Crater's lawyers argue that the CFTC's authority does not extend to cryptocurrencies because they cannot be considered a commodity, like wheat or cotton, or a service, like futures contracts, which are the main subjects of the agency's enforcement regime. 

“We believe that My Big Coin cannot be considered a commodity because it does not offer futures contracts or derivatives trading services,” said Catherine Cooper, Crater’s attorney.

Many lawyers believe that a ruling in Crater’s favor could negatively impact the CFTC’s ability to police cryptocurrency scams, since only Bitcoin offers futures trading among all digital currencies.  ( Editor's note In fact, London-based cryptocurrency derivatives broker Crypto Facilities recently announced the launch of Ethereum futures contracts.)

“This will have a chilling effect on the CFTC's ability to exercise its authority in this area,” said Gregory Kaufman, an associate at the law firm Eversheds Sutherland.

Rya Zobel, a Boston circuit judge, is preparing to hear arguments from the prosecution and defense on Thursday. The CFTC declined to comment on this topic. 

Many regulators have expressed concern about the spread of cryptocurrency scams, but the question of who has jurisdiction over them has not been resolved. The US Securities and Exchange Commission has assumed responsibility for overseeing ICOs, offerings in which companies sell digital tokens.

In the lawsuit against Crater and My Big Coin Pay Inc, the commission alleges that the prosecution misappropriated $6 million received from 28 clients.. Crater described his cryptocurrency as “an improved Bitcoin of the future,” and also stated that the currency was backed by gold.

The CFTC also noted that in March, Brooklyn District Judge Jack Weinstein ruled for the first time that digital currencies could be regulated as a commodity by the agency. In contrast, Crater's lawyers argue that the ruling only applied to Bitcoin, which is traded on futures markets.

Willkie Farr & Gallagher law firm Neil Kumar believes Crater could still lose the case because the law The commodity exchange equates services to goods not only when futures contracts are tied to them, but also when they may appear in the future.

“If their defense strategy is built solely on the fact that a service needs to have futures contracts, then it is destined to fail miserably,” he said. “This simply does not comply with the letter of the law.”

Note. ed. Recall that case law is an integral part of the Anglo-American judicial system and that is why the decision that is ultimately made will have the most direct impact on all possible subsequent similar claims and charges.

According to reuters