My Big Coin Testifies In Court As The CFTC Tries To Combat Cryptocurrency Fraud
The case against My Big Coin is being closely watched by many, as it is expected whether or not the Commodity Futures Trading Commission (CFTC) has the authority to deal with possible fraud cases associated with cryptos in the US.
People's Protective Regulators
With increasing attempts by regulators to search for potentially fraudulent crypto-companies, the CFTC sued entrepreneur Randall Crater in January, accusing him and his Nevada-based company “My Big Coin” of stealing approximately $6 million from potential investors. This Thursday, U.S. District Judge Rya Weickert Zobel will be hearing arguments from both sides in court.
U.S. regulatory jurisdictions such as the Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC) have become the subject of debate for the entire community, both for advocates and opponents of cryptos. At the same time, the industry continues to grow every day this year after the historic highs reached at the end of 2017 and despite this week's sharp decline.
Mr. Crater's and My Big Coin's defense lawyers argue that the CFTC has no authority over the digital currency because it is not a commodity and is not a service that is traded under futures contracts, and if so, the agency has full authority to engage in such cases. At the same time, it is important not to forget that Bitcoin (BTC) is the only cryptocurrency for which futures contracts are traded in the US.
“Our argument boils down to the fact that because My Big Coin does not have future contracts or other derivatives trading on it, it is not a commodity,” said Katherine Cooper, an attorney at Randall Crater.
According to observers, this legal battle over the CFTC's jurisdiction could make it a landmark case, as a ruling against the regulator is likely to affect the institution's ability to monitor cryptocurrencies fraud in the future.
Decentralized Blockchain VS. Government Protections For Users
International regulators are concerned about fraud schemes targeting users of cryptos, but it is the general community that is persistently debating who actually has jurisdiction over them, as blockchain is designed primarily for government decentralization.
There are supporters who seek to imperatively preserve the original philosophies of decentralization and self-regulation, and continue to fight against the powers that any governmental authority that may have control over the cryptocurrencies and their various platforms. On the other hand, others believe that the right kind of regulation could come from a mixed decentralization-government system, which would help foster growth in the industry and eliminate bad players.
In its lawsuit against Crater and My Big Coin, the CFTC says the defendants misappropriated $6 million from 28 clients they lured by naming their virtual currency like “Bitcoin” and claiming it was backed by gold.
Crater's lawyers argue, however, that My Big Coin is not a “commodity” under the Commodity Exchange Act because it is not a commodity or a service on which future contracts are negotiated.
In recent months, the CFTC has announced eight cases involving cryptos. In this connection, SEC colleagues have claimed authority over the method of fundraising for initial coin offerings (ICOs).
During the last week there was a lot of controversy from the moment the head of the SEC stated that his agency defines what is or is not a security value; explaining that the tokens used in ICO are, while currencies like Bitcoin or My Big Coin are not.