In January 2018, the Commodity Future Trading Commission initiated legal action against My Big Coin Pay, Inc. MGC is the creator of the My Big Coin virtual currency. The CFTC alleged that MBC engaged in fraudulent virtual currency practices by making a number of false claims in violation of, without limitation, the Commodity Exchange Act.
The CFTC alleged that the defendants misappropriated millions of dollars from consumers and obtained a restraining order that froze the defendants’ assets.
The defendants moved to dismiss. In doing so, the defendants argued that the virtual currency cannot be considered a “commodity” under the Commodity Exchange Act.
The parties – and the court – considered the CFTC’s jurisdiction over futures contracts. They also grappled with the definition and interpretation of “commodity.”
Ultimately, a Massachusetts district court concluded that there exist futures trading in virtual currencies and declined to grant the defendants motion to dismiss. The court ruled that cryptocurrencies fall under the definition of “commodity” under the Commodity Exchange Act and can be regulated by the CFTC.
The decision will almost certainly bolster the CFTC’s efforts to actively police virtual currency markets, which CFTC Chairman Christopher Giancarlo believes have great potential. It comes on the heels of a recent New York district court ruling affirming the CFTC’s jurisdiction over virtual currencies.