The US derivatives watchdog said on Friday that it has filed charges against three separate virtual currency operators alleging the defendants had defrauded customers and broken other commodity trading rules, in a further sign regulators globally are cracking down on the emerging asset class. The lawsuits, filed by the Commodity Futures Trading Commission in a New York district court, come amid heightened fears globally over the risks that bitcoin and other virtual currencies may pose to investors and the global financial system.
The CFTC charged New York resident Patrick McDonnell and his company CabbageTech with stealing money from customers that he had solicited for providing virtual-currency trading and other services. In the second case the CFTC alleged Dillon Michael Dean of Colorado and his UK-registered company Entrepreneurs Headquarters Ltd operated a Ponzi scheme in which he solicited $1.1 million in bitcoin from more than 600 investors, promising them that their cash would be pooled and invested.
The third case remained under seal as of Thursday night. McDonnell and Dean could not be immediately reached for comment on Friday via their company websites, which appeared to have been taken down.
The enforcement actions are the first by the CFTC since it allowed the launch of bitcoin futures in December, sparking criticism from some on Wall Street that the agency should have sought wider industry feedback ahead of the move.
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