A U.S. district judge has backed the U.S. Commodity Futures Trading Commission in defining cryptocurrencies as commodities.

According to a Memorandum & Order for a court case that the CFTC had brought against cryptocurrency business operator Patrick Kerry McDonnell, Judge Jack Weinstein from a district court in New York ruled that "virtual currencies can be regulated by CFTC as a commodity."

"Virtual currencies are 'goods' exchanged in a market for a uniform quality and value. ... They fall well within the common definition of 'commodity'," the judge wrote in the order on Tuesday.

At issue in the case was whether the CFTC had the authority to regulate cryptocurrency as a commodity in the absence of federal level rules, and whether the law permitted the CFTC to "exercise its jurisdiction over fraud that does not directly involve the sale of futures or derivative contracts," according to the document.

In both instances, Weinstein answered in the affirmative, meaning the case can be brought against the defendant.

The judge further granted a preliminary injunction barring the defendant from further engagement in cryptocurrency investment as the case continues.

As previously reported by CoinDesk, the CFTC defined cryptocurrencies as commodities as far back as 2015, a decision that has led the agency to recently target cryptocurrency businesses that it considers are hoaxing investors.

In one of several cases filed in January this year, the CFTC sued McDonnell and his company CabbageTech for allegedly absconding with customers' digital assets.

The agency said at the time that McDonnell branded himself as a cryptocurrency investment expert with trading advice that could result in highly attractive returns on investment. Yet soon after customers sent in money and cryptocurrencies, the defendant allegedly misappropriated the funds, according to the case.

CFTC image via CoinDesk archive

See the full Memorandum & Order below:

Memorandum & Order by CoinDesk on Scribd