In a recent ruling, a judge from the Illinois district court has classified two lesser-known altcoins, OHM and KLIMA, as commodities. This decision came as part of a broader legal case involving a $120 million cryptocurrency Ponzi scheme orchestrated by Sam Ikkurty from Oregon and associated entities.
Ikkurty’s fraudulent scheme promised investors a guaranteed annual return of 15% by investing in various crypto assets, including popular ones like Bitcoin and Ether, as well as the relatively obscure KLIMA and OHM tokens.
The US Commodity Futures Trading Commission (CFTC) brought the case to court, arguing that digital assets, regardless of their popularity, fall under the same regulatory framework as Bitcoin and are subject to futures trading regulations.
KLIMA, associated with KlimaDAO, operates as a decentralized autonomous organization focused on climate finance coordination, using KLIMA coins as governance tokens. Despite KLIMA reaching a high of $3,777, its value plummeted to just $3.55, marking a substantial decline from its peak.
Judge Classifies OHM and KLIMA Altcoins as Commodities in Ponzi Scheme Case
OHM, linked to OlympusDAO, aims to establish a decentralized reserve currency through its OHM governance token. Both tokens gained attention primarily due to their involvement in this legal proceeding.
The CFTC investigation revealed that Ikkurty misled investors by falsely claiming investments in stable crypto assets and exaggerating his investment success. Instead, he operated a classic Ponzi scheme, using new investors’ funds to pay returns to earlier investors and hiding substantial losses.
Judge Mary Rowland presiding over the case ordered Ikkurty to repay $83.7 million in restitution and $36.9 million in disgorgement. The charges against Ikkurty and his associate Ravishankar Avadhanam, filed in May 2022, included fraud and failure to register with the CFTC.
They raised over $44 million from at least 170 investors through YouTube videos, a website, and other promotional efforts, falsely claiming they would invest in derivatives, digital assets, and commodity futures contracts.
This case underscores ongoing regulatory challenges and scrutiny within the cryptocurrency industry. According to the Federal Trade Commission (FTC), over 46,000 individuals reported losses exceeding $1 billion to various crypto scams between January 2021 and June 2022, highlighting the significant financial risks and regulatory gaps that authorities continue to address.
