Chief Magistrate Judge Roanne L. Mann of the New York Eastern District Court has shown some awkward lenience towards alleged Bitcoin fraudster Patrick McDonnell who had himself given up his fight with the Commodity Futures Trading Commission (CFTC).
Just days after stating that he did not wish to answer to the CFTC complaint against him, Patrick McDonnell changed his stance during a telephone conference held before Judge Mann. After discussing his rather desperate letter with the Court, McDonnell asked instead that the deadline for answering the complaint be extended so that he may consult with the Federal Pro Bono Clinic. The Court sided with the defendant and granted his request. There will be no end to the virtual currency fraud case for the time being, as McDonnell’s answer is now due by April 25, 2018.The case in question is captioned Commodity Futures Trading Commission v. McDonnell et al (1:18-cv-00361) and was launched by the CFTC in January this year. The defendants, including McDonnell and CabbageTech, Corp. doing business as Coin Drop Markets (CDM), were charged with fraud and misappropriation in connection with purchases and trading of Bitcoin and Litecoin.The CFTC Complaint alleges that from approximately January 2017 to the present, McDonnell and his companies engaged in a deceptive and fraudulent virtual currency scheme to induce customers to send money and virtual currencies to CabbageTech, purportedly in exchange for real-time virtual currency trading advice and for virtual currency purchasing and trading on behalf of the customers under McDonnell’s direction. The customers never saw those funds again. In short, McDonnell and his company used their fraudulent solicitations to obtain and then simply misappropriate customer funds.The CFTC Complaint further alleges that to conceal their scheme, soon after obtaining customer funds, the defendants removed the website and social media materials from the Internet and ceased communicating with customers. The CFTC Complaint also alleges that none of the defendants has ever been registered with the CFTC in any capacity.The case has attracted public attention thanks to the landmark decision about the status of cryptocurrencies. The court has sided with the CFTC and ruled that virtual currencies are commodities and, hence, found that this is a market segment which is overseen by the CFTC.