CFTC Brings Enforcement Action Against Digital Exchange And Natural Person Controller Suggesting Native Cryptoasset Is A Commodity And Not A Security

The Commodity Futures Trading Commission (CFTC) charged a group of companies and their natural person controller with operating an unlicensed futures brokerage company (i.e., a futures commission merchant ("FCM")); not complying with anti-money laundering requirements applicable to FCMs; and executing and confirming futures transactions on an unlicensed futures exchange. Additionally, the CFTC alleged that the defendants engaged in attempted manipulation, fraud and deception in connection with transactions in a native cryptocurrency created and utilized by the defendants. In doing so, the CFTC implied that a little-known digital asset constituted a commodity under the CFTC's jurisdiction, and not a security under the Securities and Exchange Commission's ("SEC") jurisdiction.