A U.S. district judge sided with the U.S. Commodity Futures Trading Commission (CFTC) and ordered an Oregon man and his company to pay more than $120 million to victims of the agency's alleged Ponzi-like scheme, The Block reported. dollars, in part as compensation. Notably, the judge’s order also found OHM and Klima to be commodities.

Judge Mary Rowland of the U.S. District Court for the Northern District of Illinois stated in an opinion issued on Monday (1st) that Sam Ikkurty of Oregon and his company Jafia, LLC made "material false statements." The CFTC said in a press release on Wednesday that Ikkurty and his company failed to register and engaged in fraudulent conduct.

In his order, Judge Rowland also stated that the cryptocurrencies OHM and Klima are commodities. The CFTC wrote in a press release:

"The order determines that not only Bitcoin and Ethereum are commodities within the jurisdiction of the CFTC, but also that 'two non-Bitcoin virtual currencies, OHM and Klima... also meet the definition of commodities,' noting that these virtual currencies Currencies fall into the same category as Bitcoin, where regulated futures trading exists.”

Industry insiders believe the judge's move to treat OHM and Klima as commodities may simply not have that much impact beyond establishing the CFTC's jurisdiction over the case. “I don’t think it’s a big deal, I think it’s more in response to defendants trying to aggressively claim that the CFTC doesn’t have jurisdiction,” James Brady, a partner at law firm Katten Muchin Rosenman LLP, said in an interview.

Brady added that it is still possible that the U.S. Securities and Exchange Commission (SEC) may later deem both tokens securities.

Ponzi scheme related cases

The case involves charges of fraud and failure to register with the agency filed by the U.S. Commodity Futures Trading Commission (CFTC) in 2022 against Ikkurty and Ravishankar Avadhanam. Avadhanam's case was dropped in 2023 as part of an agreement with the CFTC, according to the order.

The CFTC said the two conducted a "Ponzi scheme"-like scheme. They raised approximately $44 million from at least 170 investors through a website and YouTube videos, and then held and engaged in digital assets, derivatives, exchanges and Trading futures contracts.

The company involved in the case, Jafia LLC, developed a crypto savings note that touted buyers as earning 18% interest per year. According to the order, Ikkurty instead invested the note funds in cryptocurrencies such as OHM and Klima, and at one point used funds purportedly raised for the investment to pay early investors in the scheme, in what the order called "a typical Ponzi scheme behavior."

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