Cryptocurrency in Small Bytes: The CFTC Chalks Up a Preliminary Win

It was only a matter of time before someone made the argument that their cryptocurrency was neither a security nor a commodity. Two of the regulatory authorities with oversight over financial investments, the SEC and the CFTC, have a mandate to protect investors with respect to transactions in securities and commodities, respectively. Until now, the argument has not been made that a cryptocurrency could be neither of the foregoing. Unsurprisingly, the Massachusetts District Court did not find that argument persuasive.

The facts of CFTC v. My Big Coin Pay, Inc. et al are not those on which great cases are based. The defendants allegedly made false statements to the purchasing public regarding their cryptocurrency “My Big Coin,” including stating that the tokens were backed by gold and could be used anywhere Mastercard was accepted. Purchasers could not trade their tokens, in spite of defendants’ statements that the tokens were listed on several exchanges (and defendants’…