Saffron is an Australian citizen living in the U.S. and Circle Society is a Nevada based company he founded, adds the announcement from the CFTC. The final judgement in the fraud and misappropriation case calls for the defendants to pay more than $32 million in restitution, disgorgement and civil monetary penalty. “The final judgment also permanently enjoins the defendants from engaging in conduct that violates the Commodity Exchange Act and CFTC regulations, registering with the CFTC, trading in any CFTC-regulated markets, and trading in any commodity interest for himself or others.”
According to the Cornell Law School Legal Information Institute, the Commodity Exchange Act is designed to protect the public interest through self-regulation, deter price manipulation and other disruptions in market integrity, ensure financial integrity with respect to transactions and to “protect all market participants from fraudulent or other abusive sales practices and misuses of customer assets.”
The default judgment against Saffron and Circle Society comes after evidence they were defrauding investors as far back as December of 2017. According to the CFTC announcement, the defendants solicited nearly $16 million in Bitcoin and U.S. dollars from “at least 179” individuals in order to “trade off-exchange binary options on foreign currencies (forex) and cryptocurrency pairs, among other things.”
Circle Society was the vehicle Saffron used to perpetuate the fraudulent activity, according to the announcement. The scheme was designed to allow members of the public to participate in a “commodity pool” run by Circle Society, which in turn, perpetuated false claims about Saffron’s industry expertise and guaranteed returns of as much as 300%.
“Rather than using pool participants’ funds to trade as promised, the defendants misappropriated funds, including by holding participants’ funds in Saffron’s personal electronic cryptocurrency wallet and by using funds to pay some participants with the funds of other participants, in the manner of a Ponzi scheme,” it adds.
From Twitter:
InSight Crime @InSightCrime Apr 9
"Venezuela President Nicolás Maduro’s experiment with the 'petro' cryptocurrency rapidly failed. But it succeeded in creating exchanges that could be used to launder money in the form of cryptocurrency. https://insightcrime.org/news/bitcoin-cryptocurrency-adds-venezuela-money-laundering-risk/"
Further, states the CFTC, most participants in the pool were unable to get their money back, despite multiple attempts to do so. Even with the ruling, those who lost funds in the scheme are not guaranteed to recover any money as the defendants’ assets may be insufficient to fulfill the order.
“The court found in its final judgment that the defendants’ ongoing failure to offer any colorable defense to the CFTC’s claims, along with the defendants’ rehashed excuses for their continued failure to comply with the court’s orders throughout the litigation, animate the CFTC’s default-judgment arguments and underlie the court’s conclusion that default judgment is warranted,” according to the CFTC.
