Crypto Options Ponzi Scheme Operator, Firm Ordered to Pay $32M

Friday 09 April 2021, 7:03 AM AEST - 2 weeks ago

A U.S. district court entered a default judgment against an Australian citizen residing in the U.S. and a Nevada corporation for a cryptocurrency fraud and misappropriation scheme, the Commodity Futures Trading Commission said Thursday.

  • Circle Society and its operator David Gilbert Saffron were charged by the CFTC with fraudulently soliciting and misappropriating investor funds, as well as registration violations.
  • Through his firm, Saffron offered binary options on forex and cryptocurrency pairs and is alleged to have fleeced investors for $11 million in dollars and bitcoin (BTC, +2.56%) since 2017.
  • Saffron fraudulently solicited funds from at least 14 individuals to participate in an investment pool operated by Circle Society, making false claims about his trading expertise and guaranteeing gains of up to 300%.
  • Saffron used those funds – diverted to his own crypto wallet – to pay other participants, in the manner of a Ponzi scheme.
  • The courts final judgment requires defendants Saffron and Circle Society, jointly and severally, to pay restitution of $14,841,280 to defrauded pool participants, disgorgement of $15,815,967, and a civil monetary penalty of $1,484,128.
  • The judgment also permanently enjoins them 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.

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