A man in the US has been charged for allegedly operating an $11 million BitcoinPonzi scheme.
The US Commodity Futures Trading Commission (CFTC) announced the filing of a civil enforcement action yesterday, charging David Gilbert Saffron of Las Vegas, and Circle Society, Corp, with “fraudulent solicitation, misappropriation, and registration violations.”
The complaint says that from at least December 2017, the defendants fraudulently solicited and accepted at least $11 million worth of Bitcoin and US dollars from at least 14 people in the United States.
The money was then used to exchange binary options on foreign currencies and cryptocurrency pairs, among other things.
Saffron created Circle Society to allegedly perpetrate his fraud, by making false claims about his trading expertise and guaranteeing rates of return up to 300 percent.
Instead of using the pool participants’ funds to trade, the defendants are accused of misappropriating funds, by retaining customers’ funds in Saffron’s own cryptocurrency wallet and using the money to pay other participants.
“Digital assets and other 21st century commodities hold great promise for our economy,” said CFTC Chairman Heath P. Tarbert.
“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,” Tarbert added.
The CFTC is looking to retrieve the funds paid into the scheme and hopes to return them to the victims, but this isn’t guaranteed.