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Executives of a US company are accused of collecting at least $ 11 million through a cryptocurrency-based Ponzi scheme.
This week, the U.S. Commodity Futures Trading Commission (CFTC) said a civil enforcement action has been filed against David Gilbert Saffron and Circle Society, Corp., a Nevada-based company.
According to prosecutors, Saffron allegedly operated a Ponzi scheme with the assistance of other defendants at the company, requesting to accept at least $ 11 million in both Bitcoin (BTC) and US dollars.
These funds were taken from investors with the promise that their & # 39; investment & # 39; would be traded and swapped for foreign currency binary options as well as various cryptocurrencies. Participants were reportedly promised a guaranteed return of 300 percent.
As is usually the case with a lure of huge returns without effort and guaranteed to start, the promise was empty.
Also see: OneCoin & # 39; CryptoQueen & # 39; defendant over alleged $ 4 billion cryptocurrency Ponzi scheme
The CFTC says that from December 2017 to the present date, a Ponzi pool operated by the Circle Society was backed by false claims regarding Saffron’s trading experience.
Instead of using cash offered by 14 investors to trade binary options, the funds were used to pay down for other participants, which continued the scheme further.
Saffron and the Circle Society are indicted for false solicitation, abuse and registration of violations. A U.S. court has also been given an order to freeze their assets.
“Fraudulent schemes, such as what is 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,” said CFTC Chairman Heath Tarbert.
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CTFC hopes the action will result in full compensation for victims, trade bans and penalties – but warns that unless the case is proven and that money can be recovered, no restitution will be possible.
A hearing is scheduled for October 29, 2019.
Ponzi schemes, fraudulent initial coin offering (ICO) and exit scams are found in the cryptocurrency space and are a headache for regulators to manage.
In May, the operators of OneCoin, Konstantin Ignatov and the self-known & # 39; crypto queen & # 39; Ruja Ignatova, central to a lawsuit alleging the couple was running a Ponzi scheme with a cryptomillion dollar.
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Complainants say that Ignatov and Ignatova’s ICO “alleged cryptocurrency that never really existed, on a blockchain that never really existed, born from mining companies that never really existed, yet falsely sold to investors worldwide through a tightly packed multi-level – marketing system. ”
OneCoin is estimated to have generated $ 4 billion in revenue. A whistleblower who has spoken out against the project has reportedly received death threats. The Bulgaria-based company is still trading.
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