CabbageTech CEO Yields in CFTC Cryptocurrency Fraud Suit

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Mr. Patrick McDonnell: Concedes in CFTC Crypto Fraud Suit

The Commodity Future Trading Commission insisted its power to regulate digital currencies as commodities after an alleged scammer gave up the legal battle against the agency on Thursday.

According to Court documents, the commodities regulators charged Mr. Patrick McDonnell doing business as Coin drop and CabbageTech – with cheating and misappropriation of funds prior this year. Mr. Patrick McDonnell purportedly marketed himself as a trading expert, acknowledge clients litecoin and bitcoin, then fled with the funds without giving them with trading advice.

On Thursday, Patrick McDonnell sent a letter to U.S. District Court Chief Magistrate of Roanne Manne from the Eastern District of New York stating he doesn’t have the resources or the capacity to continue fighting the charges made against him.

In his letter, he addressed:

“I do not wish to put my burdens on the court and respectfully decline to answer Plaintiff complaint. I understand that the case will be placed into default and am not admitting guilt in any way. My personal finances are 100 percent exhausted which in turn will leave my family destitute if I miss any more days/time from work.”

In his note Wednesday, the defendant called the charges against him “fictitious” and “crafted lies.”

This case could set a legal point of reference for the treatment of digital currencies. A U.S. District Court ordered in March that the CFTC could continue with the suit, confirming the regulator’s stance – first articulated in 2015 – that cryptocurrencies are commodities. Under the U.S. law, any good can in principle be treated as a commodity, aside from onions.

The U.S. Federal Law treats digital currencies in different ways depending on the context. The Internal Revenue Service (IRS) treats them as property for tax-collecting purposes. The Securities and Exchange Commission (SEC) has stated that some tokens marketed through ICOs qualify as securities. The Financial Crimes Enforcement Network treats businesses that manage digital currencies as the money transmitter, which means they should consent to know-your-customer and anti-money laundering (KYC/AML) rules.

Click here to read the full letter below:

Nishanth Shetty

Nishanth Shetty is a technical writer, author and a crypto-advisor working at Cryptofame. Based in the city of dreams, Mumbai, on the west coast of India. He holds a bachelors degrees from Mangalore University. Nishanth has a myriad experience of technical writings for tech brands. His interests include technology, travel, and food.