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The Commodity Futures Trading Commission (CFTC) calls Bitcoin (BTC), Ethereum (ETH), and USD Coin (USDC) commodities in the latest crypto fraud and misappropriation case. Tug-of-war continues between the U.S. CFTC and U.S. Securities and Exchange Commission (SEC) concerning which has jurisdiction over cryptocurrencies.
The SEC under Chair Gary Gensler continues its action against the crypto industry claiming that all cryptocurrencies, except Bitcoin, are securities. Meanwhile, CFTC under Rostin Behnam reasserts that some cryptocurrencies including Bitcoin, Ethereum, and stablecoins such as USDC are commodities.
US CFTC Calls Bitcoin, Ethereum, USDC “Commodities”
The Commodity Futures Trading Commission filed a civil enforcement action against former Deutsche Bank investment banker Rashawn Russell in the U.S. District Court for the Eastern District of New York.
“Certain digital assets, such as bitcoin, ether, and USDC, are encompassed in the definition of a “commodity” under Section 1a(9) of the Act, 7 U.S.C. §1a(9), and contracts for their sale are subject to the prohibitions of Section 6(c)(1) of the Act, 7 U.S.C. § 9(1), and Regulation 180.1, 17 C.F.R. § 180.1 (2022).”
The CFTC charges Russell with digital asset trading fund fraud and misappropriating at least $1 million in investor assets. The CFTC seeks restitution, disgorgement, civil monetary penalties, permanent trading and registration bans against the defendant. As well as, a permanent injunction against further violations of the Commodity Exchange Act (CEA) and other CFTC regulations.
Russel assured at least a 25 percent return on investment (RoI) and falsely promised that he would pay investors in USDC stablecoin. He misappropriated $1 million in investor assets to pay personal expenses, gambling companies, and Ponzi-like payments to current investors.
CFTC Director of Enforcement Ian McGinley asserts that the action proves the CFTC is better at protecting investors and holding bad actors accountable for fraud in the crypto industry.
Recently, CFTC classified cryptocurrencies like Bitcoin, Ethereum, and Litecoin as commodities in a lawsuit filed against Binance.
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