CFTC Accuses the Alleged Cryptocurrency Ponzi Scheme

According to the official press release published on October 16th, the US CFTC (Commodity Futures Trading Commission) charged David Gilbert Saffron of running a cryptocurrency options Ponzi scheme. The scheme was allegedly operated through Saffron’s Circle Society Corp. The company offered their clients not only cryptocurrency but also forex binary options trading services.

$11 million Ponzi scheme?

The CFTC team that includes Danielle Karst, Timothy J. Mulreany, George H. Malas, Hillary Van Tassel, and Paul G. Hayeck states that Saffron deprived his clients of $11 million through solicitation, misappropriation, and registration violations. Therefore, CFTC filed the complaint was on September 30th. Three days after, on October 3rd, the court froze all Saffron’s and his company’s assets. Moreover, the court issued the restraining order on October 11th and scheduled the hearing for October 29th.

The official complaint states that Saffron defrauded at least fourteen clients. His company accepted payments in Bitcoin (BTC) and USD and falsely guaranteed 300% of profits from trading binary options.

Circle Society website is offline

At the time of writing, the Circle Society’s website was offline, and the management doesn’t state the reason for such an occurrence. However, the short statement provides the link to the official channel where interested parties may search for information.

CFTC cryptocurrency ponzi

Crypto Ponzi schemes are undermining the development

Regarding the accusations towards Saffron and his company, CFTC Chairman Heath P. Tarbert stated,

Digital assets and other 21st century commodities hold great promise for our economy. 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.

Restitution for defrauded investors

According to the official release on this alleged cryptocurrency Ponzi scheme, the CFTC necessitates complete restitution for Saffron’s investors, and, furthermore,

Disgorgement of ill-gotten gains, civil monetary penalties, permanent registration and trading bans, and a permanent injunction against future violations of the Commodity Exchange Act and Commission regulations. 

However, CFTC discloses that it may not be possible to fully remunerate the victims of the alleged scam since Saffer and Circle Society may not have enough funds.