Deniz 
In what the CFTC (U.S. Commodity Futures Trading Commission) referred to as a “Ponzi”-like scheme, an Illinois district court sided with the government and ordered an Oregon man and his company to pay victims over $120 million, half in restitution.
Judge Mary Rowland of the U.S. District Court for the Northern District of Illinois said in a ruling released on Monday but publicized by the CFTC on Wednesday that Sam Ikkurty of Oregon and his company Jafia, LLC made “material misrepresentations.” According to the CFTC, Ikkurty’s company neglected registration and committed fraud.
Judge Rules on Crypto Commodities: OHM and Klima
Judge Rowland notably also declared that cryptocurrencies OHM and Klima were commodities in the hierarchy.
“The order finds not only 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 in the same general class as Bitcoin, on which there is regulated futures trading,” the CFTC said in a statement.
Comparatively to bitcoin, ether, or dogecoin, OHM and Klima are lesser cryptocurrencies. Still up for contention, though, is whether certain assets—within the jurisdiction of the U.S. Securities and Exchange Commission—are securities or commodities, which would then come under the CFTC. While SEC Chair Gary Gensler has indicated most cryptocurrencies are securities and has been less clear on ether’s categorization, CFTC Chair Rostin Behnam has stated ether, for example, is a commodity.
Beyond proving the CFTC’s authority over the matter, Judge Rowland’s decision to classify OHM and Klima as commodities may not have much weight at all.
James Brady, a Katten Muchin Rosenman LLP partner, remarked in an interview, “I don’t think it’s a big deal… I believe it was more in reaction to the defendant attempting to simply assert that the CFTC lacks jurisdiction.”
Brady said the SEC might still classify both as securities later on.
Charges brought by the CFTC in 2022 against Ikkurty and Ravishankar Avadhanam over claims of fraud and failing to register with the agency cover The order states that Avadhanam’s lawsuit was dropped in 2023 per an arrangement with the CFTC.
Using a website and YouTube videos to then hold and trade digital assets, derivatives, swaps, and futures contracts, the CFTC alleged the two engaged in a “Ponzi”-like scheme in soliciting nearly $44 million from at least 170 investors.
Designed for consumers, Jafia LLC created a crypto savings note claiming 18% annual interest. According to the order, Ikkurty instead put those note funds into cryptocurrencies like OHM and Klima; at one point, he allegedly utilized monies supposedly acquired for an investment to pay out early scheme participants in what the court refers to as “a classic Ponzi move.”
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