Jack Weinstein, a judge of the United States District Court for the Eastern District of New York assigned to the legal case between the US Commodity Futures Trading Commission (CFTC) and CabbageTech, a cryptocurrency operator, ruled that the CFTC had the power to give the cryptocurrencies a regulatory character of commodities.
This occurred in the legal case in which the CFTC accused CabbageTech of fraud, claiming the company improperly took the funds of its clients.
The judge Weinstein said: “Instead of achieving enormous gains on behalf of CDM Customers, once Defendants had solicited and obtained CDM Customer funds for trading by Defendants on behalf of customers, Defendants ceased communicating with the customers and misappropriated the customers’ funds.”
The judge Weinstein made this decision because in his opinion the cryptocurrencies fits the description of the commodities, since they are exchangeable on a market with uniform quality and value.
This way, it was concluded that in the absence of federal laws for the cryptocurrencies, the CFTC has the authority to regulate them as if they were commodities. Thus, the case of fraud against CabbageTech should proceed. In turn, it would restrict the possibility of CabbageTech performing any type of investments in cryptocurrencies before the case is concluded.
After this sentence, a legal antecedent was created in relation to the regulation of the cryptocurrencies. Having in mind the firm regulatory stance of the CFTC showed in the past, the new antecedent could be used in new cases before the US courts in the future.
In fact, the CFTC determined back in 2015 that the cryptocurrencies were compliant with the definition of commodity. The President of the CFTC, Christopher Giancarlo, mentioned this in his speech before the US Congress one month ago.
Besides the case against CabbageTech, the US Commodity Futures Trading Commission opened legal cases against companies that operate with cryptocurrencies and accused them of committing allegedly fraudulent schemes. In the middle of January, ths CFTC filed a lawsuit against a company called The Entrepreneurs Headquarters Limited and accused it of embezzling funds and operating in the United States without proper registration.