Bitget App
Trade smarter
Buy cryptoMarketsTradeFuturesBotsEarnCopy
Judge sides with CFTC, deems OHM and Klima commodities in case involving crypto 'Ponzi'-like scheme

Judge sides with CFTC, deems OHM and Klima commodities in case involving crypto 'Ponzi'-like scheme

The BlockThe Block2024/07/03 21:43
By:The Block

Quick Take Sam Ikkurty of Oregon and his company Jafia, LLC made “material misrepresentations,” Judge Mary Rowland of the U.S. District Court for the Northern District of Illinois said in an opinion issued this week. Notably, Judge Rowland also said that OHM and Klima were commodities. That might not be a big deal since they still could be deemed securities, according to one lawyer.

An Illinois district judge sided with the U.S. Commodity Futures Trading Commission and ordered an Oregon man and his company to pay over $120 million, partially in restitution, to victims in what the agency called a "Ponzi"-like scheme.

Sam Ikkurty of Oregon and his company Jafia, LLC made "material misrepresentations," Judge Mary Rowland of the U.S. District Court for the Northern District of Illinois said in an opinion issued on Monday, but posted by the CFTC on Wednesday. The CFTC had said Ikkurty and his firm failed to register and engaged in fraud.

Notably, Judge Rowland also said that cryptocurrencies OHM and Klima were commodities in the order.

"The order finds not only are Bitcoin and Ethereum commodities within the CFTC’s jurisdiction, but also 'OHM and Klima, two non-Bitcoin virtual currencies ... qualify as commodities, noting those virtual currencies fall into the same general class as Bitcoin, on which there is regulated futures trading," the CFTC said in a statement .

The CFTC did not respond to a request for comment.

Both OHM and Klima are smaller cryptocurrencies compared to bitcoin, ether or dogecoin. However, the determination of which assets are securities, under the jurisdiction of the U.S. Securities and Exchange Commission, or commodities, which would then fall to the CFTC, has been an ongoing debate. CFTC Chair Rostin Behnam has said ether, for example, is a commodity, while SEC Chair Gary Gensler has said most cryptocurrencies are securities and has been less straightforward on ether's classification.

Judge Rowland's move to deem OHM and Klima as commodities may not hold that much weight at all beyond establishing the CFTC's jurisdiction over the case.

"I don't think it's a big deal," said James Brady, partner at Katten Muchin Rosenman LLP, in an interview. "I think it was more in response to the defendant trying to just aggressively say that the CFTC doesn't have jurisdiction."

The SEC could still deem both to be securities later on, Brady added.

The case involves charges brought by the CFTC in 2022 against Ikkurty and Ravishankar Avadhanam over allegations of fraud and failing to register with the agency. Avadhanam's case was dismissed in 2023 as part of an agreement with the CFTC, according to the order.

The CFTC said the two conducted a "Ponzi"-like scheme in soliciting about $44 million from at least 170 investors through a website and YouTube videos to then hold and trade digital assets, derivatives, swaps and futures contracts.

Jafia LLC developed a crypto savings note that touted to buyers it would garner 18% interest per year. Ikkurty instead invested those note funds into crypto such as OHM and Klima, according to the order, and at one point used funds purportedly raised for an investment to pay off early investors in the scheme in what the order calls "a classic Ponzi move."


0

Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

PoolX: Locked for new tokens.
APR up to 10%. Always on, always get airdrop.
Lock now!

You may also like

Top Cryptos to Join for 2025? Qubetics Hits Stage 31 as Kaspa Scales PoW Speed Limits and Sonic Powers Through DeFi Frontiers

Explore the future of crypto with Qubetics, Kaspa, and Sonic. Dive into their latest features, updates, and why they’re top cryptos to join for 2025.Qubetics: The Multi-Chain Wallet RevolutionKaspa: Speed and Scalability Like Never BeforeSonic: Pushing DeFi BoundariesWhat’s Next for the Qubetics Multi-Chain Wallet?ConclusionFor More Information:

Coinomedia2025/04/27 08:00
Top Cryptos to Join for 2025? Qubetics Hits Stage 31 as Kaspa Scales PoW Speed Limits and Sonic Powers Through DeFi Frontiers

CleanSpark’s Bitcoin Center Wins Early Approval in Tennessee

CleanSpark’s Bitcoin data center project in Mountain City gets preliminary approval, promising jobs and tech upgrades.Economic Growth and Modern Mining TechnologyWhat’s Next for CleanSpark?

Coinomedia2025/04/27 08:00
CleanSpark’s Bitcoin Center Wins Early Approval in Tennessee

Meme Coins Are Pumping: Notcoin and Fartcoin Lead the Way—Is Troller Cat Next?

Discover Troller Cat's exclusive whitelist, Notcoin's latest updates, and Fartcoin's surge. Secure your spot in the $TCAT presale and explore top meme coins.Unlock Exclusive Access: Join the Troller Cat WhitelistNotcoin Flexes Big Numbers with $252M Market Cap and Rising VolumeFartcoin Hits $1.10 with Over $1B Market Cap and Major Trading VolumeConclusionFor More Information:

Coinomedia2025/04/27 08:00
Meme Coins Are Pumping: Notcoin and Fartcoin Lead the Way—Is Troller Cat Next?