Alleged crypto fraudsters insist My Big Coin is not “commodity”
In the face of a Court ruling that My Big Coin is a virtual currency, and hence, a commodity under the CEA, Randall Crater insists on the opposite.
Less than two months after Judge Rya W. Zobel of the Massachusetts District Court nixed a motion to dismiss a case targeting Randall Crater, his company My Big Coin Pay and a number of other entities associated with this cryptocurrency scheme, the defendants have filed their answers to the complaint by the Commodity Futures Trading Commission (CFTC). The opposition can be summarized as: whereas Bitcoin is a commodity, My Big Coin is different from Bitcoin, and, hence, is not a commodity.
The defendants’ arguments run counter Judge Zobel’s findings. The Judge ruled in September this year that virtual currencies are commodities under the CEA.
Commodity is a defined term in the CEA, the Judge noted. It includes a raft of specifically enumerated agricultural products as well as “all other goods and articles … and all services rights and interests … in which contracts for future delivery are presently or in the future dealt in.”
The defendants contend that because “contracts for future delivery” are indisputably not “dealt in” My Big Coin, it cannot be a commodity under the CEA. The CFTC responds that a ‘commodity’ for purposes of the CEA definition is broader than any particular type or brand of that commodity. Pointing to the existence of Bitcoin futures contracts, the regulator argues that contracts for future delivery of virtual currencies are “dealt in” and that My Big Coin, as a virtual currency, is therefore a commodity.
The text of the statute supports the CFTC’s argument, the Judge said back in September.
“Here, the amended complaint alleges that My Big Coin is a virtual currency and it is undisputed that there is futures trading in virtual currencies (specifically involving Bitcoin). That is sufficient, especially at the pleading stage, for plaintiff to allege that My Big Coin is a “commodity” under the Act”, the Judge said.
In the most recent Court filings, the defendants disregard the Court’s arguments. Randall Crater simply reiterates that he denies that the My Big Coin currency is a “commodity”. He claims that “My Big Coin is not sufficiently related to Bitcoin, the only virtual currency on which futures contracts are traded, to conclude that My Big Coin is a good, article, service, right or interest on which contracts for future delivery are dealt in, and, therefore, My Big Coin is not a “commodity” as defined in the Commodity Exchange Act”.
Thus, he argues, the Court should dismiss the CFTC Complaint with prejudice.
Let’s recall that the amended CFTC complaint alleges a fraudulent virtual currency scheme in violation of the Commodity Exchange Act (CEA). According to the CFTC allegations, Crater and the other defendants operated a virtual currency scheme in which they fraudulently offered the sale of a fully-functioning virtual currency called “My Big Coin”. In summary, the defendants enticed customers to buy My Big Coin by making various untrue and/or misleading statements and omitting material facts. The falsities included that My Big Coin was “backed by gold,” could be used anywhere Mastercard was accepted, and was being “actively traded” on several currency exchanges.
The defendants also made up and arbitrarily changed the price of My Big Coin to mimic the fluctuations of a legitimate, actively-traded virtual currency. When victims of the fraud purchased My Big Coin, they could view their accounts on a website but “could not trade their MBC or withdraw funds”. The defendants obtained more than $6 million from the scheme.
The case is captioned Commodity Futures Trading Commission v. My Big Coin Pay, Inc. et al (1:18-cv-10077).
