UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF NEW YORK

COMMODITY FUTURES TRADING 

COMMISSION, 

Plaintiff,

v. 

PATRICK K. MCDONNELL, 

and CABBAGETECH, CORP. d/b/a COIN 

DROP MARKETS, 

Defendants.

Case No. 18-CV-0361 

ECF Case

COMPLAINT FOR INJUNCTIVE 

AND OTHER EQUITABLE RELIEF 

AND FOR CIVIL MONETARY 

PENALTIES UNDER THE 

COMMODITY EXCHANGE ACT 

AND COMMISSION REGULATIONS

JURY TRIAL DEMANDED

I. INTRODUCTION

1. Since at least in or around January 2017 to the present (the “Relevant Period”), 

Patrick Kerry (“PK”) McDonnell (“McDonnell”) and CabbageTech, Corp. d/b/a Coin Drop 

Markets (“CDM”) (collectively, “Defendants”), operated a deceptive and fraudulent virtual 

currency scheme to induce customers (“CDM Customers”) to send money and virtual currencies 

to Defendants in exchange for purported virtual currency trading advice concerning the trading 

of virtual currencies, including Bitcoin and Litecoin, and for virtual currency purchases and 

trading on behalf of customers under McDonnell’s direction. Defendants’ solicitations were 

deceptive and fraudulent, and soon after obtaining the funds of CDM Customers, Defendants 

stopped communicating with their customers and simply misappropriated the funds. 

2. In an attempt to conceal the scheme, Defendants removed website and social 

media materials from the internet, and ceased communicating with CDM Customers, who lost 

most if not all of their invested funds due to Defendants’ fraud and misappropriation. 

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3. Through this conduct, Defendants were engaged, are engaging, or are about to 

engage in fraudulent acts and practices in violation of the Commodity Exchange Act (“Act”), 

7 U.S.C. §§ 1–27f (2012), and Commission Regulations (“Regulations”), 17 C.F.R. pt. 1–190 

(2017), specifically Section 6(c)(1) of the Act, 7 U.S.C. § 9(1) (2012), and Regulation 180.1(a), 

17 C.F.R. § 180.1(a) (2017). 

4. Accordingly, pursuant to Section 6c of the Act, 7 U.S.C. § 13a-1 (2012), the 

Commission brings this action to enjoin such acts and practices and compel compliance with the 

Act. In addition, the Commission seeks civil monetary penalties and remedial ancillary relief, 

including, but not limited to, trading bans, restitution, disgorgement, rescission, pre- and postjudgment interest, and such other relief as the Court may deem necessary and appropriate.

5. Unless restrained and enjoined by this Court, Defendants are likely to continue to 

engage in the acts and practices alleged in this Complaint and similar acts and practices, as more 

fully described below. 

II. JURISDICTION AND VENUE 

6. Jurisdiction. This Court has jurisdiction over this action under 

28 U.S.C. § 1331 (2012) (federal question jurisdiction) and 28 U.S.C. § 1345 (2012) (district 

courts have original jurisdiction over civil actions commenced by the United States or by any 

agency expressly authorized to sue by Act of Congress). Section 6c(a) of the Act, 

7 U.S.C. § 13a-1(a) (2012), authorizes the Commission to seek injunctive and other relief against 

any person whenever it appears to the Commission that such person has engaged, is engaging, or 

is about to engage in any act or practice constituting a violation of any provision of the Act or 

any rule, regulation, or order thereunder. 

7. Venue. Venue properly lies with the Court pursuant to Section 6c(e) of the Act, 

7 U.S.C. § 13a-1(e), because Defendants are found in, inhabit, or transact business in this 

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District, and because acts and practices in violation of the Act occurred, are occurring, or are 

about to occur, within this District. 

III. THE PARTIES

8. Plaintiff Commodity Futures Trading Commission (“Commission” or 

“CFTC”) is an independent federal regulatory agency that is charged by Congress with the 

administration and enforcement of the Act and the Regulations. The Commission maintains its 

principal office at Three Lafayette Centre, 1155 21st Street, N.W. Washington, D.C. 20581. 

9. Defendant Patrick Kerry “PK” McDonnell is a resident of Staten Island, New 

York. McDonnell owned and controlled CabbageTech, Corp. McDonnell has never been 

registered with the Commission. 

10. Defendant CabbageTech, Corp. is a New York corporation based in Staten 

Island, New York. CabbageTech, Corp. was incorporated on May 6, 2016. CabbageTech, 

Corp.’s last known address is 20 Rawson Place, Suite B, Staten Island, New York, 10314. At 

times, CabbageTech, Corp. did business as Coin Drop Markets. Neither CabbageTech, Corp. 

nor Coin Drop Markets has ever been registered with the Commission. 

IV. FACTS

11. A virtual currency is defined here as a digital representation of value that 

functions as a medium of exchange, a unit of account, and/or a store of value, but does not have 

legal tender status in any jurisdiction. Bitcoin, Litecoin, and other virtual currencies are distinct 

from “real” currencies, which are the coin and paper money of the United States or another 

country that are designated as legal tender, circulate, and are customarily used and accepted as a 

medium of exchange in the country of issuance. 

12. During the Relevant Period, Defendants solicited and received fees and 

investments from CDM Customers in various states and countries for the purposes of receiving 

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expert trade signals and trading advice for virtual currencies like Bitcoin and Litecoin and for 

virtual currency purchasing and trading managed by Defendants. 

Fraud Involving Advice About Trading Virtual Currencies

13. During the Relevant Period, Defendants solicited customers in several of the 

United States as well as foreign countries to become members of groups supposedly receiving 

Defendants’ virtual currency consulting services and trading advice. 

14. McDonnell identified himself as CDM’s CTO (Chief Technology Officer), among 

other titles. 

15. In or around April 2017, for example, Defendants advertised membership in 

trading groups such as RedliteGreenLite, BTC (“RLGLBTC”), relating to Bitcoin, and 

RedliteGreenLite, LTC (“RLGLLTC”), relating to the virtual currency Litecoin. 

16. These groups purported to provide trading advice and guidance, such as entry and 

exit prices for day trading of certain virtual currencies. 

17. Defendants also solicited membership or subscription to other groups and 

services, such as a “Turn-Key Annual Membership” providing access, for instance, to 

McDonnell’s and CDM’s supposed virtual currency trading expertise, mentorship, and guidance. 

18. For example, in or around April and May 2017, CDM’s promotional materials 

made claims such as that a CDM membership in RLGLLTC would provide “real-time . . . 

reports [of] critical $LTC entry/exit points via @RLGLLTC 24/7 including holidays/weekends.” 

19. Such promotional materials further made claims such as that this continuous, 

ongoing monitoring and trading signals “afford[ed] ‘minute-to-minute’ price arbitrage, 

exploitation, and opportunities for swing trading profits.” 

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20. Such promotional materials also made claims such as a trading group was “a 

dedicated team of digital asset trading specialists trend spotting.” 

21. These materials promised to provide the membership services on an annual basis 

in exchange for the up-front subscription fee. 

22. In or around May 2017, Defendants created one or more social media chatrooms, 

purportedly to provide the agreed-upon trading advice and services. 

23. In fact, however, after receiving subscription payments from multiple CDM 

Customers, Defendants never provided to such customers continuous, real-time trading signals, 

advice, or trading expertise through its social media chatrooms, through online communications 

such as via Twitter, or through its website. 

24. For example, Defendants never provided “real-time . . . reports [of] critical $LTC 

entry/exit points via @RLGLLTC 24/7 including holidays/weekends.” Similarly, Defendants’ 

RLGLLTC never provided signals that “afford[ed] ‘minute-to-minute’ price arbitrage, 

exploitation, and opportunities for swing trading profits.” 

25. In fact, Defendants misappropriated the CDM Customers’ funds. 

26. In or around July 2017, shortly after Defendants had solicited and obtained 

payments from numerous CDM Customers for the purchase of annual subscriptions to various 

membership services, Defendants shut down the website and chatroom, deleted social media 

accounts, ceased communicating with customers, and kept the customers’ funds. 

27. For example, in or around June 2017, one CDM Customer, responding to 

McDonnell’s promotions online through social media such as Twitter, inquired into CDM’s 

services. In response, McDonnell solicited the customer to purchase the CDM trading advice 

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service and obtained the customer’s payment. Days later, Defendants ceased all communications 

with the customer and misappropriated the customer’s funds. 

28. Defendants also solicited “lifetime” memberships in a more exclusive trading 

sector that would provide greater opportunities to profit from virtual currency trading. For 

example, one such opportunity purported to offer profits as much as 300% return on an 

investment in less than a week. 

29. Defendants’ solicitations included false and misleading representations, and 

omitted material facts, about among other things the ongoing, real-time features; the high 

profitability; and the annual or lifetime duration of services and trading advice provided by 

membership in CDM’s trading groups. 

30. McDonnell solicited customers, and received and directed deposits, withdrawals, 

and transfers of CDM Customer funds on behalf of CDM. 

31. Defendants made these false and misleading representations and omissions of 

material facts to potential customers during the Relevant Period by telephone; by internet-based 

social media, chats, and e-mails; and by the CDM website. 

32. Defendants made these false and misleading representations and omissions of 

material facts to potential customers as well as existing CDM Customers knowingly or with 

reckless disregard for the truth. 

Defendants’ Fraud Involving Management of Customer Investments in Virtual Currency

33. During the Relevant Period, Defendants also solicited CDM Customers and others 

in several of the United States as well as at least one foreign country to provide funds to 

Defendants, which Defendants would employ to purchase virtual currencies and/or engage in 

trading on the customers’ behalf. 

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34. Defendants’ solicitations involved exaggerations of McDonnell’s trading track 

record. 

35. For example, McDonnell described himself in solicitations as a “professional 

trader,” and CDM’s website included a purported example of a single virtual currency trade that 

had generated more than an approximately 1,000% return. 

36. These and other statements were false and misleading representations and 

omissions of material facts. 

37. In fact, after Defendants had solicited and obtained CDM Customer funds for 

trading by Defendants on behalf of customers, Defendants ceased communicating with the 

customers and misappropriated the customers’ funds. 

38. For example, in or around January 2017 through June 2017, one CDM Customer, 

in response to multiple solicitations by Defendants to provide funds for trading in virtual 

currencies managed by Defendants, made a series of investments with Defendants. 

39. Defendants told this customer that Defendants would use the customer’s funds to 

invest in Bitcoin. 

40. In fact, however, Defendants misappropriated this customer’s funds. 

41. In or around June 2017, when the customer requested withdrawal of the 

investments after apparently profitable results, Defendants offered a series of excuses for delays 

in repayment before ceasing communications entirely and paying out no funds at all. 

42. For another example, in or around May 2017, after being solicited by McDonnell, 

one CDM Customer provided Litecoin to Defendants for trading by McDonnell on the 

customer’s behalf. 

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43. McDonnell told this customer that he would use the customer’s funds to trade the 

“volatility” of Litecoin. 

44. Defendants misappropriated this customer’s funds and ultimately ceased 

communicating with the customer. 

45. Defendants made these false and misleading representations and omissions of 

material facts to potential customers during the Relevant Period by telephone and online through 

e-mails, chats, and social media. 

46. Defendants made these false and misleading representations and omissions of 

material facts to potential customers as well as existing CDM Customers knowingly or with 

reckless disregard for the truth. 

V. VIOLATIONS OF THE COMMODITY EXCHANGE ACT AND REGULATIONS

Count I—Fraud by Deceptive Device or Contrivance 

Violations of Section 6(c)(1) of the Act and Regulation 180.1(a) 

by McDonnell and CabbageTech, Corp. d/b/a Coin Drop Markets 

47. Paragraphs 1 through 46 are re-alleged and incorporated herein by reference. 

48. Section 6(c)(1) of the Act, 7 U.S.C. § 9(1) (2012), makes it unlawful for any 

person, directly or indirectly, to: 

use or employ, or attempt to use or employ, in connection with any 

swap, or a contract of sale of any commodity in interstate 

commerce, or for future delivery on or subject to the rules of any 

registered entity, any manipulative or deceptive device or 

contrivance, in contravention of such rules and regulations as the 

Commission shall promulgate by not later than 1 year after [July 

21, 2010, the date of enactment of the Dodd-Frank Wall Street 

Reform and Consumer Protection Act] . . . . 

49. Regulation 180.1(a), 17 C.F.R. § 180.1(a) (2017), provides: 

It shall be unlawful for any person, directly or indirectly, in 

connection with any swap, or contract of sale of any commodity in 

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interstate commerce, or contract for future delivery on or subject to 

the rules of any registered entity, to intentionally or recklessly: 

(1) Use or employ, or attempt to use or employ, any manipulative 

device, scheme, or artifice to defraud; 

(2) Make, or attempt to make, any untrue or misleading statement 

of a material fact or to omit to state a material fact necessary in 

order to make the statements made not untrue or misleading; 

(3) Engage, or attempt to engage, in any act, practice, or course of 

business, which operates or would operate as a fraud or deceit 

upon any person . . . . 

50. During the Relevant Period, as described above, Defendants violated 

Section 6(c)(1) of the Act and Regulation 180.1(a) by, among other things, in connection with 

contracts of sale of commodities in interstate commerce, making or attempting to make untrue or 

misleading statements of material fact or omitting to state or attempting to omit material facts 

necessary in order to make statements made not untrue or misleading, such as the following: 

A. Purporting to offer ongoing monitoring and expert advice and profitable trading 

signals for one year or more;

B. Failing to disclose, and omitting, that Defendants did not achieve the advertised 

performance and returns for CDM Customers; and 

C. Failing to disclose, and omitting, that Defendants were misappropriating CDM

Customer funds. 

51. As described above, Defendants violated Section 6(c)(1) of the Act and 

Regulation 180.1(a) by, among other things, in connection with contracts of sale of a commodity 

in interstate commerce, soliciting customers with false and misleading performance statements

and promises of future performance; misrepresenting and omitting material facts on Defendants’ 

website and in other communications with customers regarding the quality, duration, and nature 

of CDM’s trading signals and trading advice; misrepresenting and omitting material facts on 

Defendants’ website and in other communications with customers concerning virtual currency 

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trading of customer funds managed by Defendants; and misappropriating CDM Customers’ 

funds. 

52. Defendants engaged in the acts and practices described above willfully, 

intentionally, or recklessly. 

53. By this conduct, Defendants violated Section 6(c)(1) of the Act and 

Regulation 180.1(a). 

54. The acts, omissions, and failures of McDonnell described in this Complaint 

occurred within the scope of his agency, employment, and office at CabbageTech, Corp. 

Accordingly, CabbageTech, Corp. is liable under Section 2(a)(1)(B) of the Act, 

7 U.S.C. § 2(a)(1)(B) (2012), and Regulation 1.2, 17 C.F.R. § 1.2 (2017), as principal for its 

agent’s acts, omissions, or failures in violation of Section 6(c)(1) of the Act and 

Regulation 180.1(a). 

55. At all times relevant to this Complaint, McDonnell controlled CabbageTech, 

Corp., directly or indirectly, and did not act in good faith or knowingly induced, directly or 

indirectly, CDM’s conduct constituting the violations of CDM described in this Count. 

Accordingly, pursuant to Section 13(b) of the Act, 7 U.S.C. § 13c(b) (2012), McDonnell is liable 

for CDM’s violations of Section 6(c)(1) of the Act and Regulation 180.1(a). 

56. Each act of: (1) using or employing, or attempting to use or employ, a 

manipulative device, scheme, or artifice to defraud; (2) making, or attempting to make, untrue or 

misleading statements of material fact, or omitting to state material facts necessary to make the 

statements not untrue or misleading; and (3) engaging, or attempting to engage, in any act, 

practice, or course of business, which operated or would operate as a fraud or deceit upon any 

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person, including but not limited to those specifically alleged herein, is alleged as a separate and 

distinct violation of Section 6(c)(1) of the Act and Regulation 180.1. 

VI. RELIEF REQUESTED

WHEREFORE, the Commission respectfully requests that the Court, as authorized by 

Section 6c of the Act, 7 U.S.C. § 13a-1 (2012), and pursuant to its own equitable powers, enter: 

A. An order finding that Defendants violated Section 6(c)(1) of the Act, 

7 U.S.C. § 9(1) (2012), and Regulation 180.1(a), 17 C.F.R. § 180.1(a) (2017); 

B. An order of permanent injunction enjoining each Defendant and any other person 

or entity associated with them, including but not limited to affiliates, agents, 

servants, employees, assigns, attorneys, and all persons in active concert or 

participation with any Defendant, including any successor thereof, from: 

i. Engaging, directly or indirectly, in conduct in violation of Section 6(c)(1) 

of the Act, or Regulation 180.1(a); 

ii. Trading on or subject to the rules of any registered entity (as that term is 

defined in Section 1a(40) of the Act, 7 U.S.C. § 1a(40) (2012));

iii. Entering into any transactions involving “commodity interests” (as that 

term is defined in Regulation 1.3(yy), 17 C.F.R. § 1.3(yy) (2017)), for 

their own personal account(s) or for any account in which Defendants 

have a direct or indirect interest;

iv. Having any commodity interests traded on Defendants’ behalf; 

v. Controlling or directing the trading for or on behalf of any other person or 

entity, whether by power of attorney or otherwise, in any account 

involving commodity interests; and/or

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vi. Soliciting, receiving, or accepting any funds from any person for the 

purpose of purchasing or selling any commodity interests; 

vii. Applying for registration or claiming exemption from registration with the 

Commission in any capacity, and engaging in any activity requiring such 

registration or exemption from registration with the Commission, except 

as provided for in Regulation 4.14(a)(9), 17 C.F.R. § 4.14(a)(9) (2017); 

and/or 

viii. Acting as a principal (as that term is defined in Regulation 3.1(a), 

17 C.F.R. § 3.1(a) (2017)), agent, or any other officer or employee of any 

person (as that term is defined in Section 1a(38) of the Act, 

7 U.S.C. § 1a(38) (2012)), registered, exempted from registration, or 

required to be registered with the Commission except as provided for in 

Regulation 4.14(a)(9)).

C. An order requiring Defendants to pay civil monetary penalties of not more than 

the civil monetary penalty prescribed by Section 6c(d)(1) of the Act, 7 U.S.C. 

§ 13a-1(d)(1) (2012), as adjusted for inflation pursuant to the Federal Civil 

Penalties Inflation Adjustment Act Improvements Act of 2015, Pub. L. 114–74, 

129 Stat. 584 (2015), title VII, Section 701, see Commission Regulation 143.8, 

17 C.F.R. § 143.8 (2017), for each violation of the Act or Regulations, plus postjudgment interest; 

D. An order directing Defendants, as well as any successors thereof, to disgorge, 

pursuant to such procedure as the Court may order, all benefits received 

including, but not limited to, trading profits, revenues, salaries, commissions, 

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fees, or loans derived directly or indirectly from acts or practices which constitute 

violations of the Act and Regulations, as described herein, and pre- and postjudgment interest thereon from the date of such violations;

E. An order directing Defendants, as well as any successors thereof, to make full 

restitution, pursuant to such procedure as the Court may order, to every customer 

and investor whose funds any Defendant received, or caused another person or 

entity to receive, as a result of the acts and practices constituting violations of the 

Act and Regulations, as described herein, and pre- and post-judgment interest 

thereon from the date of such violations; 

F. An order directing Defendants, as well as any successors thereof, to rescind, 

pursuant to such procedure as the Court may order, all contracts and agreements, 

whether express or implied, entered into between, with, or among Defendants and 

any customer or investor whose funds were received by Defendants as a result of 

the acts and practices which constituted violations of the Act and the Regulations, 

as described herein;

G. An order directing that Defendants, and any successors thereof, make an 

accounting to the Court of all of their assets and liabilities, together with all funds 

they received from and paid to investors and other persons in connection with 

commodity transactions and all disbursements for any purpose whatsoever of 

funds received from commodity transactions, including salaries, commissions, 

interest, fees, loans, and other disbursement of money or property of any kind 

from at least the beginning of the Relevant Period to the date of such accounting; 

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H. An order requiring Defendants and any successors thereof to pay costs and fees as 

permitted by 28 U.S.C. §§ 1920 and 2412(a)(2) (2012); and 

I. An order providing such other and further relief as the Court deems proper. 

VII. DEMAND FOR JURY TRIAL

Plaintiff hereby demands a jury trial.

Dated: January 18, 2018 

COMMODITY FUTURES TRADING 

COMMISSION

By: s/ Gates S. Hurand 

Gates S. Hurand

Senior Trial Attorney

ghurand@cftc.gov 

Phone: (646) 746-9700 

David Oakland 

Senior Trial Attorney

doakland@cftc.gov 

Phone: (646) 746-9700 

K. Brent Tomer 

Chief Trial Attorney

ktomer@cftc.gov 

Phone: (646) 746-9700 

Manal M. Sultan

Deputy Director 

msultan@cftc.gov 

Phone: (646) 746-9700 

Commodity Futures Trading Commission 

Division of Enforcement 

140 Broadway, 19th Floor

New York, NY 10005 

Phone: (646) 746-9700 

Fax: (646) 746-9940 

ATTORNEYS FOR PLAINTIFF

COMMODITY FUTURES TRADING

COMMISSION

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