US Judge Rules OHM and Klima Are Commodities in Cryptocurrency Fraud Case

US Judge Rules OHM and Klima Are Commodities in Cryptocurrency Fraud Case

US Judge Rules OHM and Klima Are Commodities in Cryptocurrency Fraud Case

According to a report by The Block, a U.S. district judge has sided with the Commodity Futures Trading Commission (CFTC), ordering an Oregon man and his company to pay over $120 million in restitution to victims of an alleged Ponzi scheme. Notably, the judge’s order also classified OHM and Klima as commodities.
In an opinion issued on Monday (1st), U.S. District Judge Mary Rowland for the Northern District of Illinois stated that Sam Ikkurty of Oregon and his company Jafia, LLC made “material false statements.” 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 stated that the cryptocurrencies OHM and Klima are commodities. The CFTC wrote in the press release:
Industry insiders believe that the judge’s classification of OHM and Klima as commodities establishes the CFTC’s jurisdiction over the case but may not have significant broader implications. James Brady, a partner at the law firm Katten Muchin Rosenman LLP, stated in an interview: “I don’t think it’s a big deal, I think it’s more a response to the defendants’ attempts to assert that the CFTC has no jurisdiction.”
Brady added that the U.S. Securities and Exchange Commission (SEC) might still classify these two tokens as securities.
Ponzi scheme-related case
This case involves allegations of fraud and failure to register with the agency brought by the Commodity Futures Trading Commission (CFTC) against Ikkurty and Ravishankar Avadhanam in 2022. According to the order, Avadhanam’s case was dismissed in 2023 as part of a settlement with the CFTC.
The CFTC alleges that the two operated a scheme akin to a “Ponzi scheme,” raising approximately $44 million from at least 170 investors through a website and YouTube videos, and then engaging in digital asset, derivatives, swaps, and futures contract transactions.
The involved company, Jafia LLC, developed a crypto savings note promising buyers an annual interest of 18%. According to the order, Ikkurty instead invested the note funds into cryptocurrencies such as OHM and Klima, and at one point used the purportedly investment-raised funds to pay early investors in the scheme, which the order described as “a classic Ponzi scheme act.”