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The U.S. Commodity Futures Trading Commission (CFTC) filed a lawsuit against the Nevada-based corporation Circle Society and its owner, David Gilbert Saffron of Las Vegas, for Ponzi-like cryptocurrency scam and registration violations relating to an $11 million cryptocurrency fraud operation.
The CFTC filed a civil enforcement action on Monday, September 30, 2019, and accused the defendants for unethical use of funds that were raised to trade in binary crypto and forex options. The case was filed in the U.S. District Court for the District of Nevada and hearing on “the Commission’s Motion for Preliminary Injunction” is scheduled for October 29, 2019.
According to the press release, published on Oct. 16, the CFTC complained that the defendants misused $11 million worth of cryptocurrency i.e. Bitcoin(BTC)trade and U.S. dollars from individuals in the United States to “trade off-exchange binary options on foreign currencies and cryptocurrency pairs, among other things.” On October 3, the court issued a one-sided judgment and ordered to freeze the financial and crypto assets under control of the defendants and preserve the records.
The CFTC Chairman, Heath Tarbert, commented about this and other related scams:
“Digital assets and other 21st century commodities hold great promise for our economy. Fraudulent schemes, like that alleged in this case, not only cheat innocent people out of their hard-earned money, but they threaten to undermine the responsible development of these new and innovative markets. America must be a leader in this space, and we will only succeed if these markets have integrity.”
According to the complaint, the defendants had started soliciting and accepting Bitcoin and USD from individuals from 2017 and pooled at least $11 million. Saffron used Circle Society, an entity he created and used to execute his scam, where he fraudulently solicited funds from at least fourteen members of the public to participate in Circle Society’s operated pool. He further made false promises and even guarantees to give 300% return on investment with his supposed binary trading and investing expertise.
Saffron promised to use the collected funds to trade in binary options contracts; however, he misused the funds by transferring the Bitcoin haul in his person digital wallet and by paying other participants to carry out his Ponzi schemes and false promises.
Continuing the legal actions, “the CFTC seeks full restitution to defrauded investors, disgorgement of ill-gotten gains, civil monetary penalties, permanent registration and trading bans, and a permanent injunction against future violations of the Commodity Exchange Act and Commission regulations,” the press release read.