“I am sorry I cannot help you” – Judge responds to defrauded cryptocurrency investors

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The recent flourishing of cryptocurrency scams appears to have created confusion and real havoc among their victims as defrauded investors are now seeking to approach all possible institutions in their efforts to get their money back.

One of the most prominent cases against a cryptocurrency scam lately has been the one taken by the United States Commodity Futures Trading Commission (CFTC) against Patrick K. McDonnell, of Staten Island, New York, and CabbageTech, Corp. d/b/a Coin Drop Markets (CDM), a New York corporation. The defendants are charged with fraud and misappropriation in connection with purchases and trading of Bitcoin and Litecoin.

This case, which proceeds at the New York Eastern District Court, turned out to be a milestone for such prosecutions, as Judge Jack B. Weinstein has agreed with the CFTC that virtual currencies are commodities under the Commodity Exchange Act (CEA). This means that the CFTC has the authority to take action against cryptocurrency scams.

Importantly, the CFTC has made clear its intentions to use the Court’s ruling about the status of virtual currencies as commodities in other cases too, such as the one against My Big Coin Pay, Inc., Randall Crater, and Mark Gillespie.

The latest actions by the New York Eastern District Court against cryptocurrency scams have gained public attention. Moreover, they appear to have given hope to victims of other cryptocurrency fraudulent schemes that they may have a chance in obtaining justice.

The procedure is not as simple as it may look, however. Judge Jack B. Weinstein, assigned to the case against McDonnell, has earlier this month received an email from investors claiming to defrauded by BitSolid.

The email states:

“Good morning Judge Weinstein,

I came across an article stating that you had filed a 79 page preliminary injunction against a cryptocurrency trading advice firm that stands accused of fraud. I know of another firm that is fraudulent as well. It is bitsolid.io. My friend and I, along with numerous other people, have invested US dollars with this website and have not received our money back and now the site’s withdrawal feature has been shut down for over a month. I am an officer in the US army and was wondering if you might be able to take a look into this or at least point me in the right direction regarding getting this situation resolved, or at least getting an investigation started.

Thank you”

The Judge has replied:

“Dear Mr. …,

The court has received your email dated March 8, 2018. I am sorry I cannot help you.

You may be able to file a formal complaint with the Division of Enforcement of the Commodity Futures Trading Commission on their website located at: http://www.cftc.ov/ConsumerProtectjonJFjleaTjnorComnlajnt/jndex.htm. You may also be able to report information by calling the Commodity Futures Trading Commission toll-free at: 866-FON-CFTC (866-366-2382).”

This situation underscores the difficulties that the cryptocurrency boom presents to regulators, especially with regards to prosecuting fraudsters. Whereas social networks are promising to take down virtual currency ads, it is clear that scams involving cryptocurrencies have already reached a wide number of people.

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