US Federal Judge – Cryptocurrencies are Commodities

The ruling of Judge Jack Weinstein has cleared the CFTC pathway to take action on Coin Drop Markets. The New York Federal Judge verdict means Commodity Futures Trading Commission (CFTC) is now authorized to take control over cryptocurrencies as commodities and can now regulate and classify the asset, according to Reuters new report!

According to the US district judge, CFTC has a constitutional legal standing to proceed with a fraud lawsuit against Patrick McDonnell, a New York resident. In January 2018, CFTC filed a case against McDonnell and the firm he owns, Coin Drop Markets!

The complaint indicated that McDonnell had been trading fraudulent investment advice and sold something that never existed. Also, his customers did not get the advice they paid for. Besides, Coin Drop was also not registered by the CFTC!

On March 6, 2018, the ruling was made official, after the ruling of Judge Weinstein concluded that “a reasonable possibility that without order the defendants will keep on violating the CEA [as per Commodity Exchange Act].”

The Order and Memorandum containing the verdict stated that “the court discovers the plaintiff has a preliminary prima facie portraying that the defendants did fraud by misuse of investors’ money and misrepresentation via false trading counsel and assured future profits.”

While the latest ruling may prove to be a vital plot tip in the storyline that is increasingly complicating the saga of cryptocurrency legislation in the USA, by and large, the federal government has restrained from making key rulings on crypto control!

However, that may quickly change, and it’s only last week that the Wall Street Journal had reported SEC submitting “scores of subpoenas” to cryptocurrency companies around the country!

Nevertheless, the state of New York has established its regulatory framework. New York-based companies that trade in cryptocurrency should not be having money transmitter licenses. Rather, they are technically needed to have licensure application under the ‘BitLicense’ program in New York, despite the program having been condemned for not being properly enforced or well-executed!

After all, the nation-wide onslaught on fraudulent activity linked with crypto is apparent, and McDonnell is the most recent, but it won’t be the last!