US Court Orders Crypto Ponzi Scheme Operator to Pay $32 Million

A federal court in Nevada has entered a default judgment against Circle Society and its operator David Gilbert Saffron for running a cryptocurrency fraud and misappropriation scheme.

The case was brought to court by the Commodity Futures Trading Commission (CFTC), and on Thursday, the regulator announced that the Nevada-based corporation and the Australian man residing in the United States have to pay a total of $32 million according to the court’s order.

A Classic Ponzi Scheme Ponzi Scheme A Ponzi scheme is a scam that looks to lure investors, ultimately paying profits to earlier investors with funds from more later investors.This form of fraud tricks victims into believing that products are instead generated from product sales or other means. In actuality, most investors are completely oblivious to the actual origin of incoming funds.One of the central attributes of a Ponzi scheme is the necessity of its ongoing nature, which is dependent on a steady flow of new contributions and A Ponzi scheme is a scam that looks to lure investors, ultimately paying profits to earlier investors with funds from more later investors.This form of fraud tricks victims into believing that products are instead generated from product sales or other means. In actuality, most investors are completely oblivious to the actual origin of incoming funds.One of the central attributes of a Ponzi scheme is the necessity of its ongoing nature, which is dependent on a steady flow of new contributions and Read this Term

Circle Society was offering binary options on Forex Forex Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest tradi Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest tradi Read this Term and cryptocurrency pairs, a derivatives investment instrument itself very controversial due to a large number of associated frauds. Saffron and the company persuaded investors to send funds to participate in a commodity pool, with promises of returns as high as 300 percent.

According to the CFTC, the scheme started its operations in 2017 and fraudulently solicited and accepted at least $15.8 million from at least 179 individuals. Instead of using the funds for trading, Saffron diverted the funds to his personal cryptocurrency wallet and also paid out existing participants from new investments, making it a classic Ponzi scheme.

“The majority of participants, however, have been unable to obtain a return of any of their funds despite their repeated demands,” the US regulator stated.

The court has now ordered the company and Saffron to pay restitution of more than $14.8 million to defrauded pool participants and disgorgement of another $15.8 million, along with a civil monetary penalty of over $1.48 million. In addition, the court enjoined the defendants from registering with the CFTC or trading on any other CFTC-regulated entities.

However, the regulator cautioned the victims that there might not be a full recovery of all their losses.

“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 announcement added.