The regulator filed and settled charges against CoinFlip, Inc. and its chief executive director Francisco Riordon for conducting activities that straightforwardly violated the Commodity Exchange Act (CEA) and CFTC Regulations. These illegal activities, as mentioned by CFTC, mainly include the trading and processing of commodity options.
“In this order, the CFTC for the first time finds that Bitcoin and other virtual currencies are properly defined as commodities,” said the regulator’s press release.
“The Order further finds that the activities related to commodity option transactions were not conducted in compliance with a provision of the CEA or a provision of the Regulations otherwise applicable to swaps, and were not conducted pursuant to the Regulation 32.3 “trade option” exemption.”
It is evident that the CFTC contends its authority to provide a regulatory framework for companies seeking to offer cryptocurrency-based derivatives and options. With this said, these companies are now liable to register themselves as a swap execution facilities or designated contact market — or face the wrath of law.
“While there is a lot of excitement surrounding Bitcoin and other virtual currencies, innovation does not excuse those acting in this space from following the same rules applicable to all participants in the commodity derivatives markets,” commented Aitan Goelman, the CFTC’s director of enforcement.