The ruling by US Federal Judge Jack Weinstein labeling cryptocurrencies as commodities paves the way for the US Commodity Futures Trading Commission to classify and regulate them as such, according to a report from Reuters.
The Brooklyn-based judge’s decision, which stated that the CFTC has standing to proceed with a fraud lawsuit against New York resident Patrick McDonnell. The complaint was filed by the CFTC against McDonnell and his company Coin Drop Markets two months ago, in January 2018.
The lawsuit states that McDonnell allegedly sold fraudulent investment advice, or more accurately, was selling something non-existent. Customers simply did not get the advice that they paid for. In addition Coin Drop was not registered with the CFTC.
The ruling came officially on March 6 after a hearing during which Judge Weinstein stated that the CFTC found “a reasonable likelihood that without an injunction the defendants will continue to violate the CEA [Commodity Exchange Act].”
The ruling, found in the Memorandum and Order, declares that “the court finds the plaintiff has made a preliminary prima facie showing that the defendants committed fraud by misappropriation of investors’ funds and misrepresentation through false trading advice and promised future profits.”