As per the press release published by the U.S. Commodity Futures Trading Commission (CFTC), David Gilbert Saffron, creator of Circle Society, Corp., has violated several laws by running a Ponzi crypto scheme. It was said that as much as $11 million was looted in dollars by Saffron and his company.
As cryptocurrencies such as bitcoin are extremely volatile assets capable of offering very high financial gains, people especially investors are quite attracted to various cryptos promising guaranteed returns. And the very same sentiment is capitalized by bad actors in the space.
Saffron was able to get participation from about 14 people. Portraying himself as a trader working for Mark Cuban who is a billionaire and owner of the NBA’s Dallas Mavericks, Saffron tried to gain the trust of many. However, in other instances, he used some other tactics to attain the confidence of investors.
For instance, he promised investors that he could double their investments within 2 weeks only. He explained that he could do so by deploying 57 bots on different computers. Then after collecting funds from different investors, instead of investing them, he transferred them to his own crypto wallet or paid some of the earlier investors.
At the moment, the U.S. District Court for the District of Nevada has agreed to restrict the access of assets belonging to Saffron and his company Circle Society by freezing them. Moreover, CTFC is asking for money raised by Saffron while operating his Ponzi scheme.
In addition to that, the CFTC is also willing to impose a trade ban along with some financial penalties against Saffron and his company. Furthermore, elaborating on how such illicit and fraudulent practices hinder and damage the progress of markets, CFTC Chairman Heath Tarbert said:
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.
Now, catching Saffron and retrieving the funds from him is the utmost priority of CTFC. Although emphasize was laid on returning funds to the investors after recovering them, CTFC straightforwardly said that returning full value to investors isn’t guaranteed. So, let’s see if CTFC can compensate the victims while punishing the alleged bad actors.