The Commodity Futures Trading Commission has revealed that the U.S. District Court for the District of Nevada has found that David Gilbert Saffron and Circle Society, Corp. has been operating a cryptocurrency fraud and misappropriation scheme.
On 29 March 2021, the court ordered Saffron and Circle Society to pay restitution of $14,841,280 to defrauded investors, disgorgement of $15,815,967 and a civil monetary penalty of $1,484,128. The defendants were also permanently enjoined from engaging in conduct that violates regulations, registering with the CFTC, trading in any CFTC-regulated markets, and trading in any commodity interest.
The court’s decision follows an enforcement action from 30 September 2019 brought by the CFTC. The US watchdog charged the defendants with fraudulent solicitation, misappropriation, and registration violations.
The CFTC found that since December 2017, Saffron has fraudulently solicited around $15,815,967 worth of Bitcoin and U.S. dollars from 179 investors to trade off-exchange binary options on forex and cryptocurrency pairs, among other things.
Saffron created Circle Society and used it to carry out his fraudulent activity. The CFTC has stated that Saffron and Circle Society solicited investors in a commodity pool operated by Circle Society by making false claims of Saffron’s trading expertise and guaranteeing investment returns of up to 300%.
The Commission found that Saffron did not use the funds to trade as promised, but held the money in his personal electronic cryptocurrency wallet. He also used funds from some participants to pay others on a Ponzi scheme principal. However, the majority of investors have not received their money back despite their repeated demands.
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