The ruling will enable the U.S. Commodity Futures Trading Commission (CFTC) to regulate cryptocurrencies and make make fraudsters more accountable for their actions.
In a landmark ruling, U.S. federal judge Jack Weinstein ruled that virtual currencies, including bitcoins, can be regulated as commodities by the U.S. Commodity Futures Trading Commission (CFTC).
The ruling allows the lawsuit filed by the CFTC against New York resident Patrick McDonnell and his company Coin Drop Markets, to go forward.
Further, Weinstein’s ruling allows a preliminary injunction which bars McDonnell and Coin Drop Markets from engaging in any commodity transactions.
McDonnell, who incidentally is representing himself, declined to comment on the decision.
In 2015, the CFTC, the market regulator for futures, commodity and derivatives markets, had first determined that virtual currencies are commodities in 2015.
Weinstein ruled that the CFTC had broad leeway to interpret the meaning of the word “commodity” in the context of federal law that regulates commodities.
In January, in its lawsuit, the CFTC had said since around January 2017, McDonnell and his company, Coin Drop Markets, fraudulently offered customers virtual currency trading advice.
Coin Drop Markets is not only not registered with the CFTC but also its customers never received the advice that they paid for. Having received the money, McDonnell took down the company’s website and stopped responding to customers.
Regulation of virtual currencies is still in its early stages with Congress yet to pass any laws which addresses them directly.
Both, the SEC and the CFTC have warned on the need to combat fraud in the virtual currency markets.