However, the CFTC does not have the power to regulate every aspect of trading in commodities. Importantly when it comes to cryptocurrency, the CFTC considers Bitcoin and many other cryptocurrencies to be a commodity, giving the CFTC a seemingly good start in the race to regulate crypto. These laws give the CFTC power to regulate the trading of commodities. The CFTC was created in 1974 and largely draws its power from the Commodity Futures Trading Commission Act of 1974 and the Commodity Exchange Act of 1934 (“CEA”). This article reflects the legal and strategic issues that may decide the race to regulate crypto and explains the prediction that the SEC will come out on top. There is no shortage of interested parties with both the Securities and Exchange Commission (“SEC”) and the Commodity Futures Trading Commission (“CFTC”) vying for the role of the new crypto-sheriff in town. Much like the cons that penny-stock promoters are famous for, the rise of crypto investment fraud has made the area a prime target for regulation. Perhaps the reason why the Squid Game scam grabbed the headlines was not because of the dollar amount involved, but the fact that main street investors are now getting caught by crypto investment fraud. Valued at today’s prices, that 700,000 Bitcoin would have been worth an incredible $40 billion dollars. Back in 2013, an individual from Texas conned investors out of 700,000 Bitcoin in a Ponzi scheme that was shut down by the Securities and Exchange Commission (SEC). While the story has grabbed the headlines, it is nowhere near the largest crypto fraud. John Joy, Managing Attorney and founder of FTI Law in New York, discusses crypto regulation and the two regulatory agencies racing to regulate them.Įarlier this month, a digital currency based on the Netflix series “Squid Game” soared in value before collapsing dramatically as its promoters quickly pulled out their funds in what is known as a “rug pull.” The website promoting the cryptocurrency was only three weeks old and was littered with grammatical errors, tell-tale signs that it was a scam, and it is estimated that investors lost around $3 million USD.
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