Court finds that CFTC has power to prosecute virtual currency fraud

A senior judge at a US District Court has entered an order holding that the Commodity Futures Trading Commission (CFTC) has the power to prosecute fraud involving virtual currency.

The order arises from a CFTC federal court enforcement action charging numerous defendants with commodity fraud and misappropriation related to the solicitation of customers for the virtual currency, My Big Coin (MBC). The CFTC’s complaint alleges that since at least January 2014, the defendants operated a fraudulent virtual currency scheme in which they solicited customers to purchase a fully-functioning virtual currency, MBC, by repeatedly making false and misleading claims about its value, usage, trade status, and financial backing.

Agreeing with the CFTC’s arguments, the Court held that the CFTC had sufficiently alleged that the particular virtual currency at issue, MBC, was a commodity under the Commodity Exchange Act (CEA) because the CFTC alleged that MBC “is a virtual currency and it is undisputed that there is futures trading in virtual currencies (specifically involving Bitcoin).”

James McDonald, CFTC director of Enforcement, commenting on the ruling, stated: “This is an important ruling that confirms the authority of the CFTC to investigate and combat fraud in the virtual currency markets.”

Read the full release

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