Morrison Cohen Leads High-Profile Challenge to CFTC’s Crypto Authority Before Seventh Circuit

The Commodity Exchange Act’s (CEA’s) definition of “commodity” is “not a catch-all, it’s a catch some,” explained Morrison Cohen Partner Jason Gottlieb, chair of the firm’s Digital Assets and White Collar and Regulatory Enforcement practices, during oral argument on May 22, 2025 before the U.S. Court of Appeals for the Seventh Circuit, in a case that attracted significant media coverage.

The oral argument concerned a major unsettled issue of law: whether cryptocurrencies without associated futures contracts fall within the CEA’s definition of “commodity.” In arguing that the answer to that question is a resounding “no,” Jason explained that “[w]e have to figure out whether the digital assets here were caught or not, and respectfully, we submit they were not. It was an error of law below to assume that [the statute] covers all these digital assets.”

Jason argued that the District Court’s error of broadly classifying all cryptocurrencies as “commodities” would improperly expand the Commodity Futures Trading Commission’s (CFTC’s) authority, effectively making it “a sort of freelance sheriff” with sweeping anti-fraud powers well beyond its statutory mandate.

Morrison Cohen acts as appellate counsel on behalf of appellants Sam Ikkurty and Jafia LLC, who operated a hedge fund invested in digital assets. The appeal seeks reversal of the order and judgment of the United States District Court for the Northern District of Illinois, who granted summary judgment in the CFTC’s favor.

While the appeal does not contest the district court’s factual findings, Jason argued that the CFTC lacked jurisdiction over the case from the outset. The investments at issue principally did not involve Bitcoin or Ether – assets generally accepted as commodities because there are traded futures contracts for those tokens – but instead focused on lesser-known digital tokens like OHM and Klima that are arguably outside the CEA’s scope.

The case has drawn national media attention, with Bloomberg Law and Law360 among the outlets covering the proceedings.

Jason P. Gottlieb and Michael Mix are representing Ikkurty and Jafia LLC. The case is CFTC v. Sam Ikkurty et al., case number 24-2684, in the U.S. Court of Appeals for the Seventh Circuit.

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