## Facts

- The Commodity Futures Trading Commission (CFTC) brought a civil enforcement action alleging defendants ran a fraudulent virtual-currency scheme involving “My Big Coin” (MBC).
- Defendants allegedly solicited customers to buy MBC using false or misleading claims and omissions, including that MBC was backed by gold, usable wherever Mastercard was accepted, and actively traded on multiple exchanges.
- Defendants allegedly fabricated and arbitrarily changed MBC’s price to track movements of a legitimate, actively traded virtual currency.
- Customers could view purported account balances online but allegedly could not trade MBC or withdraw funds.
- Defendants allegedly raised more than $6 million from customers through MBC sales.
- The CFTC alleged violations of Commodity Exchange Act (CEA) § 6(c)(1), 7 U.S.C. § 9(1), and CFTC Regulation 180.1(a), asserting fraudulent and deceptive conduct in connection with commodity sales in interstate commerce.
- At the pleading stage, the court had entered emergency relief (including an asset freeze and injunction) and then addressed defendants’ Rule 12(b)(6) motion to dismiss the amended complaint.

## Issues

1. Whether MBC, as a virtual currency, qualifies as a “commodity” under the CEA even if no futures contracts exist on MBC itself.
2. Whether CEA § 6(c)(1) and CFTC Regulation 180.1 are limited to market-manipulation cases or also reach stand-alone fraud in connection with commodity sales.
3. Whether the amended complaint sufficiently pleaded misappropriation of customer funds to survive dismissal.

## Decision

- The court denied the motion to dismiss in full.
- The court held that virtual currency can fall within the CEA’s “commodity” definition and that a particular virtual currency need not itself be the subject of a futures contract if it belongs to a class (virtual currencies) in which futures are traded.
- The court held that CEA § 6(c)(1) and Regulation 180.1 are not confined to traditional market manipulation and can reach fraudulent misrepresentations and omissions in connection with commodity sales.
- The court held that the CFTC plausibly alleged misappropriation and deceptive conduct sufficient to proceed past the pleading stage.

## Legal Principles

- Under the CEA, a “commodity” may be defined at the level of a class or category; the statute does not require futures trading in the specific item at issue if futures contracts are dealt in within the broader category.
- Virtual currencies may constitute “commodities” under the CEA where futures contracts exist for at least some virtual currencies.
- CEA § 6(c)(1) and CFTC Regulation 180.1 broadly prohibit the use of manipulative or deceptive devices and schemes to defraud in connection with commodity sales in interstate commerce, and are not limited to classic manipulation theories.
- On a Rule 12(b)(6) motion, the court accepts well-pleaded allegations as true and determines whether they plausibly state claims for fraud and related misuse of customer funds under the CEA and implementing regulations.

## Conclusion

The court allowed the CFTC’s enforcement case to proceed, concluding that the amended complaint plausibly alleged a fraudulent virtual-currency sales scheme within the CFTC’s commodity-fraud authority and that virtual currency can qualify as a commodity under the CEA even absent futures trading in the specific coin at issue.


Commodity Futures Trading Comm’n v. My Big Coin Pay, Inc., 334 F. Supp. 3d 492 (D. Mass. 2018)