Second Department Reinstates Regal Commodities’ Crypto Losses Claim Against Tauber
Regal Commodities Wins Reversal, Tauber’s Crypto Losses May Reach Court
New York’s Second Department just flipped the script on a commodities-fraud suit, giving Regal Commodities another shot at recovering millions from former client Jeffrey Tauber. The appellate panel ruled that Tauber’s alleged oral promise to cover trading losses on a crypto-related commodities account could still be enforced, reversing a lower court that had thrown the case out. For crypto traders and brokers alike, the message is blunt: handshake deals around digital assets are now one step closer to being treated like binding contracts.
The dispute began in 2021 when Regal, a registered futures commission merchant, claimed Tauber personally guaranteed to backstop losses after aggressive bets on ether-linked futures blew up. Tauber countered that any such promise was an unenforceable “special promise to answer for the debt of another” under New York’s statute of frauds. The trial judge agreed and dismissed the claim. On appeal, however, the Second Department held that the alleged guarantee was part of the same transaction that created the underlying debt—thus falling outside the statute’s writing requirement. The court reinstated Regal’s breach-of-contract and account-stated claims, letting the case proceed to discovery.
For the moment, Regal is the clear winner: it can now depose Tauber, subpoena trading records, and potentially force a settlement before trial. Tauber, meanwhile, faces renewed litigation risk and the prospect that a verbal assurance made in the heat of a crypto drawdown could cost him millions. Exchanges and introducing brokers who extend leverage or margin to crypto traders will read the decision as validation that informal loss-sharing arrangements can stick—even when they involve novel digital-asset products.
In plain English, the ruling lowers the legal bar for proving that a trader personally vouched for crypto-related losses. It does not declare ether futures commodities, nor does it expand SEC jurisdiction, but it signals that New York courts will not give special protection to digital-asset participants who make oral financial promises. Brokers gain leverage in collection disputes; traders lose a once-potent shield.
The decision injects a dose of old-school contract risk into a market still dominated by Telegram messages and voice notes. Until federal legislation or clearer CFTC guidance arrives, anyone guaranteeing a crypto position in New York should assume the conversation is already on the record.
