An Illinois district judge has ruled in favor of the U.S. Commodity Futures Trading Commission (CFTC), ordering Oregon resident Sam Ikkurty and his company Jafia, LLC to pay over $120 million, partly in restitution, to victims of what the CFTC described as a “Ponzi”-like scheme.
Judge Mary Rowland of the U.S. District Court for the Northern District of Illinois issued the opinion on Monday, which was posted by the CFTC on Wednesday. The ruling stated that Ikkurty and Jafia made “material misrepresentations” and engaged in fraud without proper registration.
In a notable part of the order, Judge Rowland classified cryptocurrencies OHM and Klima as commodities, extending the CFTC’s jurisdiction. “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.
Both OHM and Klima are smaller cryptocurrencies compared to Bitcoin, Ether, or Dogecoin. The ongoing debate about which assets are securities (under the SEC’s jurisdiction) and which are commodities (under the CFTC’s jurisdiction) continues. While CFTC Chair Rostin Behnam has classified Ether as a commodity, SEC Chair Gary Gensler suggested most cryptocurrencies are securities and has been less clear on Ether’s classification.
The case stems from charges brought by the CFTC in 2022 against Ikkurty and Ravishankar Avadhanam for fraud and failure to register with the agency. Avadhanam’s case was dismissed in 2023 as part of an agreement with the CFTC.
According to the CFTC, Ikkurty and Avadhanam solicited $44 million from at least 170 investors through a website and YouTube videos, promising to hold and trade digital assets, derivatives, swaps, and futures contracts. Jafia LLC developed a crypto savings note that promised buyers an 18% annual interest. Instead, Ikkurty invested the funds into cryptocurrencies like OHM and Klima and used funds raised for investments to pay off early investors in a classic Ponzi scheme move.
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