Bankruptcy cannot save cryptocurrency fraudster as CFTC presses ahead with legal action
The CFTC continues its action against alleged cryptocurrency fraudster Patrick McDonnell.
Patrick McDonnell, the person behind fraudulent cryptocurrency scheme CabbageTech, Corp. aka Coin Drop Markets (CDM), has tried to stay a legal action against him by filing for bankruptcy protection. He got nowhere with that.
As per the latest filings with the New York Eastern District Court, seen by FinanceFeeds, the defendant submitted a notice that he had filed a voluntary bankruptcy petition. One of the ideas behind such a move is to have legal actions against the bankrupt entity stayed. But the Commodity Futures Trading Commission (CFTC) did not agree to such a stay.
In a letter filed with the Court on Tuesday, the CFTC argued that the automatic stay for bankruptcy proceedings does not apply to this action. “In particular, the law specifically excludes from the automatic stay certain matters, including an action by a federal agency like the CFTC enforcing its regulatory powers”, the regulator noted.
The Court said that in the face of the filing for bankruptcy by the defendant, the proceedings continue. For instance, the settlement conference set for today will be held. Moreover, Mr McDonnell must attend the conference in-person, the Judge ordered.
McDonnell and his companies are charged with fraud and misappropriation in connection with purchases and trading of Bitcoin and Litecoin. Last week, the alleged Bitcoin fraudster filed his response to the CFTC complaint. He disagreed with all allegations made by the CFTC and insisted that virtual currencies are not commodities and, hence, the CFTC has no right to take an enforcement action against him.
In his reply, McDonnell said 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 also claimed that “the Chicago Mercantile Exchange (“CME”) was financially motivated to join the case”.
In conclusion, McDonnell said he was “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”.