According to “The Block” report, a U.S. district judge has supported the Commodity Futures Trading Commission’s (CFTC) view, ordering an Oregon man and his company to pay over $120 million to the victims of the so-called Ponzi scheme, partly as restitution. Notably, the judge’s order also recognized OHM and Klima as 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 “significant misrepresentations.” The CFTC, in a press release on Wednesday, stated that Ikkurty and his company were unregistered and engaged in fraudulent activities.
Judge Rowland’s order also indicated that cryptocurrencies OHM and Klima are commodities. The CFTC wrote in the press release:
Industry insiders believe that the judge’s move to view OHM and Klima as commodities, besides establishing the CFTC’s jurisdiction over the case, may not have that much impact. James Brady, a partner at law firm Katten Muchin Rosenman LLP, said in an interview: “I don’t think it’s a big deal, I think it’s more of a response to the defendant’s active claim that the CFTC had no jurisdiction.”
Brady added that the Securities and Exchange Commission (SEC) might still consider these two tokens as securities later on.
Ponzi Scheme-Related Case
This case involves fraud and unregistered allegations brought by the CFTC against Ikkurty and Ravishankar Avadhanam in 2022. According to the order, as part of an agreement with the CFTC, Avadhanam’s case was dismissed in 2023.
The CFTC claimed that the two implemented a Ponzi-like scheme, raising about $44 million from at least 170 investors through a website and YouTube videos, then holding and engaging in digital asset, derivative, exchange, and futures contract transactions.
The involved company Jafia LLC developed a crypto savings note, offering buyers an 18% interest per annum. According to the order, Ikkurty instead invested these note funds into cryptocurrencies such as OHM and Klima and at one point used the funds allegedly raised for investment to pay the project’s early investors, which the order called “a typical Ponzi scheme behavior.”