Alleged Bitcoin fraudster Patrick McDonnell fails to have case against him dismissed

Maria Nikolova

Judge Jack B. Weinstein reaffirms his earlier ruling that the CFTC has the right to prosecute cryptocurrency fraud.

Patrick McDonnell, a defendant in a cryptocurrency fraud case launched by the United States Commodity Futures Trading Commission (CFTC) in January this year, has suffered a defeat, as the Court has rebuffed his motion to dismiss the case against him.

As per the latest filings with the New York Eastern District Court, Judge Jack B. Weinstein affirmed his memorandum & opinion from March this year, which stated that the CFTC has the right to prosecute cryptocurrency scammers because virtual currencies are commodities under the Commodity Exchange Act (CEA). This was a landmark ruling which the CFTC sought to use in other cases against cryptocurrency fraudsters.

McDonnell and his company – CabbageTech, Corp. d/b/a Coin Drop Markets (CDM), have since filed a number of motions in an attempt to dismiss the case. The crux of all these motions was the claim that virtual currencies are not commodities and that the Judge should reconsider his ruling.

As per an Order filed with the Court today, the Judge found that the initial Order should not be modified. That is, virtual currencies are commodities and the CFTC has the right to take enforcement action against scams related to Bitcoin and its likes.

The Judge noted that no valid basis for a change in the Order has been offered.

Let’s recall that, according to McDonnell, the CFTC complaint is “financially and politically motivated created out of thin air to secure the U.S. regulatory sphere surrounding Bitcoin and Virtual Currency markets”. He has also claimed he is “a sacrificed pawn in a bigger game, this case in not about a “so-called” fraud or misappropriation of investor funds, it is about controlling Bitcoin which has become a threat to world financial systems”.

The case is captioned Commodity Futures Trading Commission v. McDonnell et al (1:18-cv-00361).

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