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[UPDATED] Coin Drop Markets CEO Gives Up Defense In Critical CFTC Cryptocurrency Case



De Silva

On Wednesday, Patrick McDonnell threw in the towel in his defense against the Commodity Futures Trading Commission.

UPDATED | April 16, 2018:

On April 12, 2018, in a telephone conference to discuss the letter he submitted the day before, defendant Patrick McDonnell requested that the court extend the deadline for answering the CFTC's complaint so that he may confer with the Federal Pro Bono Clinic, rather than simply letting the case go into default. The Court granted McDonnell's request and set the new deadline for April 25, 2018.

ORIGINAL | April 13, 2018:

On April 11, 2018, Patrick K. McDonnell – a defendant in the Commodity Futures Trading Commission's case against CabbageTech, Corp (DBA Coin Drop Markets) – submitted a letter to Judge Roanne L. Mann of the US District Court for the Eastern District of New York.

"I do not have the proper finances, knowledge, mental/physical strength, representation, nor, time to continue this fight," wrote McDonnell. "I do not wish to put my burdens on the court and respectfully decline to answer Plaintiff complaint. I understand that the case will be placed into default and am not admitting guilt in any way."

It appears likely that the CFTC will now make a motion for default judgment. The case is No. 18-CV-00361.

In January, the CFTC filed charges against McDonnell and CabbageTech, Corp, charging them with fraud and misappropriation connected with the purchase and trading of bitcoin and Litecoin. The agency alleged that the defendants solicited money and virtual currencies from customers in exchange for trading advice (which was never provided) and misappropriated funds that supposedly were to be traded on behalf of customers.

In March, the judge initially presiding over the case, Jack B. Weinstein, granted the CFTC's preliminary injunction against the defendants. In doing so, Judge Weinstein effectively affirmed the CFTC's 2015 finding that bitcoin and other virtual currencies are "properly defined" as commodities, a pivotal interpretation that could set a standard for cryptocurrency prosecution at large.

Just two days after Judge Weinstein granted the preliminary injunction, the CFTC filed a notice of supplemental authority in its case against My Big Coin Pay, Inc., Randall Crater, and Mark Gillespie.

Calls to Mr. McDonnell and CFTC trial attorney Hurand Gates were not immediately returned.

Matthew De Silva

Matthew has a passion for law and technology. He graduated from Georgetown University, where he studied international economics and music. Matthew enjoys biking and listening to tech podcasts. He lives in Los Angeles.

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