How CFTC Won Court Order Against Crypto Firm?
There is an interesting court verdict in a case between the United States’ Commodities Futures Trading Corporation (CFTC) and digital coin associated CabbageTech Corp. The regulator has banned the firm for “bold and vicious” committed by it in respected of digital coin associated activities. Though the agency thinks that cryptos are treated as property or commodity, securities regulator has a different opinion. That is the SEC treats most of the digital coins as securities. Therefore, the current ruling could be an interesting and an important one.
Misappropriation and Fraud
CabbageTech operator and virtual currency promoter, Patrick McDonnell, was charged with misappropriation in respect of the trading and purchase of bitcoin (BTC), as well as, litecoin (LTC). This has also been branded as fraud early in the current year, cointelegraph.com reported. Following this, the operator has contested the authority of the CFTC as far as regulating his commercial operations are concerned. However, the New York district judge, Jack Weinstein, did not accept his argument and rejected it.
Last month, the Judge conducted a non-jury trial. At that point in time, he claimed that McDonnell was running a “boiler room.” This was meant to mislead promising invests from various states, as well as, nations. The crypto promoter was also charged with using false and trickery statements apart from indulging in misappropriation of funds. Following this, Weinstein has ordered McDonnell to pay $290,429 towards compensation while slapping penalties of $871,287. This would mean that he would have to shell out more than $1.16 million.
The case of CabbageTech was not represented by an attorney. That is because McDonnell has claimed that he was not in a position to pay for any lawyer. Also, he stopped himself from appearing before the court during the trial of the case. That meant that his side of contention or justice could not be presented to the forum. Alternatively, he might have felt being cornered and there is no point in waging a losing battle.
It appears that it is not the only case where McDonnell was involved. For instance, CFTC has slapped a suit against Coin Drop Markets of the same person. The regulator has charged him and the company for not delivering their promise of offering trading advice on cryptocurrencies though the company got paid for it. On top of it, McDonnell has closed down the web portal of Coin Drop and was not ready to respond to queries from customers.
The regulator pointed out that the company was not registered with it. Significantly, the court ruling comes amidst Congressman Bill Huizenga, wanting to provide enough authorities to SEC and CFTC to regulate the virtual currency market. The Representative wanted the rulings that govern stocks and currencies to be applied to cryptocurrencies too.
A few ago in May, Chris Giancarlo, chairman of CFTC, indicated that he failed to see any complete legislation of crypto coming in the near future. He pointed out that the guidelines were written way back in 1935 while indicating that it would take time to accept modern innovation such as bitcoin.