Commodity Futures Trading Commission v. My Big Coin Pay, Inc.

My Big Coin Pay, Inc. and others (collectively, MBC) (defendants) enticed customers to buy My Big Coin virtual currency by falsely claiming that My Big Coin tokens were backed by gold, could be used wherever Mastercard was accepted, and were being actively traded on several currency exchanges. MBC also concocted prices and arbitrarily repriced My Big Coin tokens to match the trading prices of other virtual currencies. Purchasers of My Big Coin tokens could see their account balances on the internet but could not trade their My Big Coin tokens or withdraw funds. MBC obtained more than $6 million through the sales of My Big Coin tokens. The Commodity Futures Trading Commission (CFTC) sued MBC, alleging that MBC violated § 6(c)(1) of the Commodity Exchange Act and CFTC Regulation 180.1(a) by engaging in fraud. The district court entered a preliminary injunction against MBC. MBC moved to dismiss the CFTC’s complaint, arguing that My Big Coin tokens were not commodities because contracts for future delivery were not dealt in My Big Coin tokens. MBC further argued that the act applied only to market manipulation and not to stand-alone fraud. The CFTC responded that a commodity under the act was broader than any particular type or brand of that commodity. The CFTC further noted that because there were futures contracts for another virtual currency (Bitcoin), contracts for future delivery of virtual currencies like My Big Coin tokens were dealt in, and virtual currencies thus were commodities.