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

The latest crypto news show that the United States Commodity Futures Trading Commission (CFTC) announced the filing of a civil enforcement action against the Nevada-based Circle Society. On October 16, the CFTC files a lawsuit showing that it is charging Circle Society and its owner, David Gilbert Saffron, with “fraudulent solicitation, misappropriation, and registration violations relating to an $11 million binary options scheme.”

As the charges show, the defendants misappropriated at least $11 million worth of Bitcoin (BTC) and US dollars from individuals in the United States in order to “trade off-exchange binary options on foreign currencies and cryptocurrency pairs, among other things.”

This is the latest Bitcoin scam which raised the eyebrows of many regulators. Now that CFTC files lawsuit against the Ponzi-like scam, the 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.”

As the details show, 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 returns up to 300%.

Saffron is alleged to have retained the participants’ funds in his own personal cryptocurrency wallet and used them to pay the new participants “in the manner of a Ponzi scheme.” Right now, the CFTC is aiming to seek civil monetary penalties, restitution, rescission, disgorgement of ill-gotten gains as well as trading and registration bans. As CFTC files a lawsuit, it is also aware that there might not be sufficient funds or assets to cover all of its losses.

Previously, the news showed that the CFTC sees Bitcoin as a commodity – but the new CFTC chairman said that he believes Ether (ETH) is a commodity and that ETH futures trading is becoming a reality. This shocked many because Ether was not mentioned before by the CFTC.
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“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,” Tarbert explained.