The Commodity Futures Trading Commission (CFTC) won its case against Circle Society, its owner David Gilbert Saffron for committing cryptocurrency fraud and misappropriation scheme.
A federal court in Nevada issued a final judgment requiring Circle Society and Mr. Saffron to pay $32 million for defrauding at least 179 investors from December 2017 to the present.
The judgment included $14,841,280 in restitution to defrauded pool participants, disgorgement of $15,815,967, and a civil monetary penalty of $1,484,128.
Additionally, the federal court permanently banned Circle Society and Mr. saffron from engaging in activities that violate the Commodity Exchange Act and CFTC regulations.
Furthermore, the federal court permanently prohibited the defendants from registering with the CFTC, trading in any CFTC-regulated markets, and trading in any commodity interest.
In its final judgment, the federal court noted that the defendants consistently failed to provide any valid defense to the CFTC’s allegations against them.
“The rehashed excuses that the defendants offered during the hearing for their continued failure to comply with this court’s orders, and their ongoing failure to offer any colorable defense to the Commission’s claims, animate the Commission’s default-judgment arguments and underlie my conclusion that default judgment is warranted here,” according to U.S. District Judge Jennifer A. Dorsey in her order against Circle Society and Mr. Saffron.
CFTC allegations against Circle Society and Mr. Saffron
In its complaint, the CFTC alleged that the defendants lured their victims to trade off-exchange binary options on foreign currencies (forex) and cryptocurrency pairs. Since December 2017, they fraudulently solicited and accepted at least $15.8 million from their victims.
Mr. Saffron allegedly created and used Circle Society to perpetrate cryptocurrency fraud. He encouraged investors to participate in a commodity pool operated by his company.
He misrepresented his trading expertise and falsely guaranteed up to 300% rate of returns to investors.
The CFTC also alleged that Circle Society and Mr. Saffron did not use the funds collected from pool participants. The defendants misappropriated the funds. Mr. Saffron held pool participants’ funds in his personal electronic cryptocurrency wallet. He paid some pool participants using others’ funds in a Ponzi scheme manner.
The majority of pool participants did not obtain a return or any of their funds despite their repeated demands.
The CFTC charged Circle Society and Mr. saffron with fraudulent solicitation, misappropriation, and registration violations.
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