Alert
Alert
07.24.25
In CFTC v. TMTE Inc. (Metals.com), Judge Brantley Starr of the U.S. District Court for the Northern District of Texas issued an opinion that casts doubt on whether the Commodity Futures Trading Commission (CFTC) can assert antifraud jurisdiction over transactions involving gold and silver bullion under the Commodity Exchange Act (CEA). While the case involves alleged misconduct in the sale of precious metals to retirees, the court’s reasoning—if adopted more broadly—could implicate the scope of the CEA with respect to other non-agricultural products, including digital assets, interest rates, foreign exchange, energy products and energy attributes.
In the case, the CFTC and 30 state attorneys general filed fraud claims against the principals of Metals.com and affiliated entities. The complaint alleged a multiyear scheme in which elderly investors were persuaded to move retirement funds into gold and silver products, often through self-directed IRAs. Customers were told that bullion would be sold at spreads of 1–5%, and numismatic coins at 17–33%, but actual markups reached 91–128%—even for standard bullion coins allegedly misrepresented as “collectible” or “exclusive.”
The CFTC’s claims rely on its antifraud authority under Section 6(c)(1) of the CEA, as added by the Dodd-Frank Act, and CFTC Rule 180.1, which prohibits deceptive or manipulative conduct in connection with any contract of sale of a commodity in interstate commerce—including spot transactions outside of derivatives markets. However, in denying summary judgment, Judge Starr—applying a strict textualist interpretation—questioned whether gold and silver bullion are “commodities” under the CEA, which defines the term primarily through a list of agricultural products, followed by a catch-all phrase for “all other goods and articles … in which contracts for future delivery are presently or in the future dealt in.” Judge Starr wrote: “The Court is familiar with farms and gold mines but not a gold farm,” and concluded that the definition “does not encompass precious metals as commodities because they are neither agricultural products nor movie tickets.” The court did not address Section 19 of the CEA, which expressly refers to gold and silver in the context of standardized contracts—a provision that may bear on the statute’s overall scope but was not briefed by the parties.
Importantly, other federal courts—including the Eastern District of New York, District of Massachusetts and others—have upheld the CFTC’s authority to police fraud in digital asset spot markets under the same statutory provisions. For example, in CFTC v. My Big Coin Pay, Inc., 334 F. Supp. 3d 492, 497 (D. Mass. 2018), in denying the defendants motion to dismiss, Judge Zobel held that Congress’ approach to defining the term “commodity” signals an intent that courts focus on categories—not specific items—when determining whether the “dealt in” requirement is met” under the CEA. The court further held that virtual currencies—including the “My Big Coin” token—are “commodities” under the CEA and that the CFTC may bring fraud claims under Section 6(c)(1) and Rule 180.1(a). See also, CFTC v. My Big Coin Pay, Inc., Randall Crater et al., 2025 WL 1021899, *6-9 (D. Mass. 2025) in which, in enforcing fraud claims under Section 6(c)(1) and Rule 180.1, the District of Massachusetts approved a consent order against Randall Crater for defrauding investors via the “My Big Coin” digital asset scheme, affirming that digital asset spot transactions fall within the CFTC’s antifraud jurisdiction.
Likewise, in CFTC v. McDonnell, 287 F. Supp. 3d 213, 224-28 (E.D.N.Y. 2018), Eastern District Judge Weinstein held that virtual currencies are “goods” and “commodities” under the CEA and that the CFTC may use Rule 180.1 to police fraud in connection with spot commodity transactions, including cryptocurrencies. “It would make sense for regulators to treat Bitcoins as a commodity … [t]his categorization would be appropriate because it realistically reflects the economic behavior of Bitcoin users and squares with traditional economic conceptions of exchange.” Similarly, in CFTC v. Russell, 2025 WL 1021766 (E.D.N.Y. 2025), the Eastern District enforced the anti-fraud provisions of the CEA to bitcoin and other digital assets, treating them as commodities.
Courts have likewise applied the CEA to cover a range of other non-agricultural commodities, often without serious challenge. Against this backdrop, Judge Starr’s opinion appears to be a jurisprudential outlier—at least for now.
While the ruling does not foreclose the government’s claims (and the case will proceed to trial), it presents an interpretive counterpoint that may be cited by future litigants. Whether other courts adopt this narrow approach remains to be seen, and it will be worth monitoring how the issue develops—particularly in circuits with more established authority over financial markets.