In the latest sign of regulatory action in the virtual currency realm, the Commodity Futures Trading Commission (CFTC) has filed a lawsuit against three virtual currency operators, with allegations that the trio had defrauded customers.
In addition, the regulator charged, the three operators broke laws governing commodity trading.
The Globe and Mail reported that the CFTC filed suit in New York. One suit, against Patrick McDonnell and his company Cabbage Tech, alleges that money was stolen from customers amid solicitations for virtual currency trading services.
In the second case, reported Friday, the CFTC sued Colorado-based Michael Dean and Entrepreneurs Headquarters, which is registered in the United Kingdom. Allegations center around a Ponzi scheme that allegedly ensnared hundreds of investors for more than $1 million in bitcoin. The firm had promised that cash would be pooled and invested, reported The Globe and Mail. At this writing, the third case was still sealed. The newspaper noted that these are the first actions that come against operators since bitcoin futures were launched in December of last year.
Earlier this week, the CFTC and the Securities and Exchange Commission issued a joint statement warning of risks tied to virtual currency operators. They said they would “continue to address violations and to bring actions to stop and prevent fraud in the offer and sale of digital instruments.”
The suits come after a flurry of regulatory announcements spanning the globe. South Korea and China, for example, have been scrutinizing their respective trading arenas. As reported in this space earlier this month, official word from South Korea’s Blue House (the local equivalent of the White House) indicated that there will be no ban on bitcoin trading in that country.
In March, Germany and France will look to put forth jointly authored regulatory proposals at the G20 meeting.