US CFTC Orders Ponzi Scheme Operator To Pay $32 Million Fine
A US District Court for the District of Nevada has fined Circle Society and owner David Gilbert Saffron for operating a cryptocurrency ponzi scheme. This is according to the Commodity Futures Trading Commission (CFTC).
Circle Society Ponzi Scheme
The regulator stated that both the Nevada-based corporation and its operator have to pay $32 million as ordered by the court.
Saffron, an Australian citizen, residing in the US, started the firm Circle society to offer binary options on forex and cryptocurrency pairs. Both he and the company allegedly deceived investors to send funds in order to participate in a commodity pool, with promises of high returns.
Since 2017 when Circle society was created, Saffron has reportedly duped investors of at least $15.8 million from about 179 people. According to the CFTC, he diverted investor funds to his crypto wallet to pay other participants “in the manner of a Ponzi scheme.”
The court’s final judgment requires defendants Saffron and Circle Society, jointly and severally, to pay restitution claims of more than $14.8 million to defrauded pool participants and disgorgement fine of $15.8 million, and a civil monetary fine of over $1.48 million.
The judgment also enjoined the defendants from registering with the CFTC or trading on any other CFTC-regulated entities.
However, the CFTC has told victims not to expect much as they might not be able to get their full funds back.
“The CFTC cautions victims that restitution orders may not result in the recovery of any money lost because the wrongdoers may not have sufficient funds or assets,” the statement read.
The regulator filed the civil enforcement action against Saffron and Circle Society in 2019, alleging that Saffron solicited and accepted a minimum of $11 million in Bitcoin and US dollars with other defendants’ help in the company.
The CFTC Chairman Heath Tarbert had then said that fraudulent schemes like Saffron and his company do not only cheat innocent people out of their hard-earned money, but they also threaten to undermine the development of new and innovative markets.
Spike In Crypto-Related Scams
Cybercrime seems to have increased since the advent of cryptocurrency as it is constantly being used to scam people. Even though regulators continue to warn users against crypto scams and, in fact, scams in general, people are still falling victims.
Even though fraudulent activities had existed before crypto came along a decade ago, many crypto owners are falling victims because many retail investors have knowledge gaps. With the fear of missing out (FOMO) surrounding digital tokens, crypto investors are readily suckered into deals with these fraudsters promising huge returns.
Last month, the CFTC ordered fraudulent Bitcoin trader Benjamin Reynolds to pay $572 million in penalty and restitution for a crime he committed in 2017. He was ordered to pay a $429 Million fine penalty and an additional $142 million as restitution to victims.