Alleged Bitcoin fraudster gives up fight with CFTC
Patrick K. McDonnell refuses to admit guilt and to respond to the CFTC complaint.
The case launched by the United States Commodity Futures Trading Commission (CFTC) against Patrick K. McDonnell, of Staten Island, New York, and CabbageTech, Corp. d/b/a Coin Drop Markets (CDM) over virtual currency fraud, has attracted attention mostly due to the landmark decision about the status of cryptocurrencies. The court has sided with the CFTC and ruled that virtual currencies are commodities and, hence, found that this is a market segment which is overseen by the CFTC.
The defendant has given up his legal fight against the regulator. On Wednesday, April 11, 2018, he sent the following Letter to the New York Eastern District Court.
“Dear Chief Magistrate Judge Mann,
I am a Defendant in the above referenced matter writing you concerning my position regarding the case. I cannot in right mind answer the Plaintiffs’ fictitious complaint. Acknowledgement of Plaintiffs’ wording breeds life to crafted lies that have already destroyed my family/name. I do not have the proper finances, knowledge, mental/physical strength, representation, nor, time to continue this fight. I do not wish to put my burdens on the court and respectfully decline to answer Plaintiff complaint. I understand that the case will be placed into default and am not admitting guilt in any way. My personal finances are 100% exhausted which in turn will leave my family destitute if I miss anymore days/time from work.
I apologize to the Court and recognize the help, efforts, and resources provided to me from all”.
The case in question is captioned Commodity Futures Trading Commission v. McDonnell et al (1:18-cv-00361) and was launched by the CFTC in January this year. The defendants were charged with fraud and misappropriation in connection with purchases and trading of Bitcoin and Litecoin.
The CFTC Complaint alleges that from approximately January 2017 to the present, McDonnell and his companies engaged in a deceptive and fraudulent virtual currency scheme to induce customers to send money and virtual currencies to CabbageTech, purportedly in exchange for real-time virtual currency trading advice and for virtual currency purchasing and trading on behalf of the customers under McDonnell’s direction. The customers never saw those funds again. In short, McDonnell and his company used their fraudulent solicitations to obtain and then simply misappropriate customer funds.
The CFTC Complaint further alleges that to conceal their scheme, soon after obtaining customer funds, the defendants removed the website and social media materials from the Internet and ceased communicating with customers. The CFTC Complaint also alleges that none of the defendants has ever been registered with the CFTC in any capacity.
The CFTC seeks, inter alia, restitution to defrauded customers, disgorgement of benefits from violations of the Commodity Exchange Act and CFTC Regulations, civil monetary penalties, and trading bans.
