Declaring that virtual currencies are commodities covered under existing law, this Reuters article discusses the first case brought against a Bitcoin trading platform by the Commodity Futures Trading Commission:
“The agency said Coinflip was operating an online platform known as Derivabit, which helped match up buyers and sellers with Bitcoin options.
Because these Bitcoin options are deemed “commodities,” the CFTC said the business should have been properly registered and subject to the laws governing swaps.
“While there is a lot of excitement surrounding Bitcoin and other virtual currencies, innovation does not excuse those acting in this space from following the same rules applicable to all participants in the commodity derivatives markets,” said Aitan Goelman, the head of the CFTC’s Enforcement Division.”
The outcome was not very punitive. Riordan represented himself and he claims the customer’s funds had all been returned prior to the CFTC contacting him. The result was that the CFTC did not impose any penalties and Riordan did not admit to or deny the charges.
The article goes on to describe other pending cases:
“The Securities and Exchange Commission has also brought a handful of cases so far involving Bitcoin, including one case late last year against a computer programmer who ran virtual currency trading platforms that were not registered as brokers, as required by law.”
Overview by Tim Sloane, VP, Payments Innovation at Mercator Advisory Group
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