US court rules in favour of CFTC’s ban on crypto firm
A court has ruled in favor of US Commodities Trading Commission (CTFC) invoking a permanent ban on the operator of CabbageTech, Patrick K. McDonnell. The New York-based company was involved in a crypto-related ‘bold and vicious’ fraud, Bloomberg published the report on August 24.
CabbageTech was involved in crypto-related fraud
District Judge of Brooklyn, New York, Jack B Weinstein had rejected McDonnell’s argument claiming that CFTC didn’t have any authority to regulate his business.
Weinstein held a non-jury trial in July where it was claimed that McDonnell operated a ‘boiler room’ that duped the huge number of investors in various states and countries using “trickery, false statements and misappropriation of funds.”
As per Bloomberg, no lawyer represented CabbageTech as McDonnell claimed he couldn’t afford to hire a counsel. The CabbageTech CEO was reportedly not present at the courtroom during the trial. Weinstein had urged him to ask for legal help and delivered a default judgment against CabbageTech that was not represented by any lawyer.
A different lawsuit was also filed by CFTC against McDonnell’s another firm Coin Drop Markets. The CTFC lawsuit claims that customers didn’t get any advice on crypto trading from McDonnell and Coin Drop, despite paying for the same. Finally, the Coin Drop’s website was closed down and McDonnell failed to respond to the customers. CFTC also mentioned in the lawsuit that Coin Drop wasn’t listed registered with CFTC .
In a speech from Capitol Hill last month, Congressman Bill Huizenga opined for more empowerment of financial regulators like US Securities and Exchange Commission (SEC) and CFTC to bring complacency in the cryptocurrency market so that everyone abides by the same rules governing other currencies as well as stocks.
In a May statement, CFTC Chairman Chris Giancarlo, said: “The statutes we are operating, you know, were written… in 1935 … And it’s often hard to look at those statutes and find out where something as new and innovative as Bitcoin and many other cryptocurrencies, where do they fall into a regulatory regime which was written decades ago… we see elements of commodities that are subject to our regulation, but depending on which regulatory regime you are looking at, it has different aspects of all of that.”
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