The US Commodity Futures Trading Commission (CFTC) has scored a guilty verdict against an operator who has been deemed a fraudster. The cryptocurrency operator named Patrick K. McDonnell ran his business through CabbageTech.
The defendant had been accused of intentionally violating the Commodity Exchange Act by the CFTC. Further, the charge sheet reads that the cryptocurrency firm defrauded its clients by not delivering on its promises. The crypto promoter is accused of cheating investors by running a bold and vicious fraud.
Hefty fines in restitution and penalties
Bloomberg reports that the defendant faced a non-jury trial in Brooklyn, New York where he was found guilty. The CFTC was given power to permanently ban the crypto operator. According to the August 24, 2018 report, the scammer was also ordered to pay $871,287 in penalties and $290,429 in restitution. To this end, McDonnell is prohibited from any future trading of virtual currencies.
In his defense, the accused called out that the CFTC was not legally mandated to regulate his business. However, U.S. District Judge Jack B. Weinstein refuted the statements. The judge ruled that the defendant has been operating a “boiler room”. The judge also found that McDonnell used “trickery, false statements, and misappropriation of funds” to rip off his clients.
Further, Bloomberg reports that the judge was forced to undergo a default judgment against McDonnell’s company CabbageTech. This is the reason that the defendant stopped coming to court during the trial.
Regulating the cryptocurrency market
It is reported that McDonnell was also involved in another lawsuit with the CFTC. The lawsuit claims that through Coin Drop Markets, the accused refused to render services already paid for. The company purportedly offered premium crypto trading advice to its clients. However, it is claimed that the customers did not receive the service they paid for. Instead of addressing the issue, McDonnell is reported to have shut down the company’s website. Further, the company is said to be not officially recognized by the CFTC.
In light of this, members of Congress have been reported calling for the empowerment of financial regulators. They argue that the crypto market needs to be regulated the same way other currencies and stocks are policed.
