Bankruptcy cannot save cryptocurrency fraudster as CFTC presses ahead with legal action

Maria Nikolova

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”.

Read this next

Retail FX

Texas Slaps Forex Scam with Cease and Desist Order

The Texas State Securities Board (TSSB) is following through on its promise to crack down on online trading fraud.

Industry News

JPMorgan Chase to open its UK neobank next week

JPMorgan Chase, the biggest US bank by total assets, will next week launch its City’s digital-only bank, which offers a range of savings and loan products under its ‘Chase’ brand in the UK.

Retail FX

TIOMarkets UK reports $78,461 in 2020 revenues

TIOmarkets’ FCA-regulated entity reported its financial results for the year ending December 31, 2020. The company posted a revenue figure that was nine times the amount it reported in the fiscal year of 2019.

Technology

Equiduct deploys big xyt’s data analytics for equity market structure

“Banks, asset managers, exchanges and market participants across the globe consistently rely on big xyt as an independent reference for equity market structure”.

Retail FX

BDSwiss partners with PayRetailers to address payment landscape in LATAM

PayRetailers’ suite of payment options via single seamless API integration will be available for BDS Markets Ltd. only.

Digital Assets

Coinbase applies for NFA license while awaiting SEC lawsuit

A license from the National Futures Association (NFA) would open the door to cryptocurrency derivatives trading.

Industry News

Euroclear acquires MFEX to enhance offering for fund distributors and fund managers

This transaction brings together two highly complementary businesses.

Industry News

Madoff Victim Fund sends $568 million to 31,000 victims of Ponzi scheme

Bernard L. Madoff used his position as chairman of BLMIS to steal billions from his clients.

Digital Assets

Revolut uses Bitcoin to Pay for its office space

Revolut, the company that is looking to build a financial super app, has used bitcoin to pay for its largest office space in Dallas, Texas to the flexible workspace provider WeWork.

<