CFTC Files Lawsuit Against $11M Ponzi-Like Cryptocurrency Scam

The United States Commodity Futures Trading Commission has charged a Nevada company with violations relating to an $11 million Ponzi-like crypto scam.

The United States Commodity Futures Trading Commission (CFTC) has announced the filing of a civil enforcement action against Nevada-based Circle Society.

Defendants guaranteed investors 300% return

On Oct. 16, the CFTC announced that it was charging Circle Society and its owner, David Gilbert Saffron, with “fraudulent solicitation, misappropriation, and registration violations relating to an $11 million binary options scheme.”

According to the charges, the defendants misappropriated at least $11 million worth of Bitcoin (BTC) 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.” CFTC Chairman Heath P. Tarbert said:

“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.”

The defendants are said to have duped at least 14 people into joining a pool operated by Circle Society, a fraudulent entity created by Saffron, which guaranteed up to 300% returns. Saffron is alleged to have retained the participants’ funds in his own personal cryptocurrency wallet and used them to pay new participants “in the manner of a Ponzi scheme.”

The CFTC will seek civil monetary penalties, restitution, rescission, disgorgement of ill-gotten gains, and trading and registration bans, but is aware that there might not be sufficient funds or assets to cover all the losses.

Tarbert says Ethereum is a commodity

Cointelegraph previously reported that the new CFTC chairman has said that he believes Ether (ETH) is a commodity and that ETH futures trading is becoming a reality.

The CFTC previously stated that Bitcoin is a commodity, but Ether, the second-biggest cryptocurrency by market capitalization, had not been mentioned before. Tarbert explained:

“We've been very clear on bitcoin: bitcoin is a commodity. We haven't said anything about ether—until now [...] It is my view as chairman of the CFTC that ether is a commodity.”

Publication date: 
10/17/2019 - 00:48
Author: 
Disclaimer

The views and opinions expressed in this article are solely those of the authors and do not reflect the views of Bitcoin Insider. Every investment and trading move involves risk - this is especially true for cryptocurrencies given their volatility. We strongly advise our readers to conduct their own research when making a decision.