Las Vegas resident David Saffron and his company, Circle Society, Corp., are facing charges of fraud related to an $11 million binary options scheme, according to a complaint filed by the U.S. Commodity Futures Trading Commission (CFTC) in the U.S. District Court for the District of Nevada. The complaint, initially filed September 30, 2019, alleges fraudulent solicitation, misappropriation of funds, and registration violations.
The CFTC alleges that from December 2017 through the present, Saffron and Circle Society fraudulently solicited at least $11 million in bitcoin and U.S. dollars from at least 14 individuals to trade off-exchange binary options involving foreign currencies and cryptocurrency pairs. The defendants allegedly made false claims about Saffron’s trading expertise, guaranteeing returns of up to 300% to investors who participated in a pool operated by Circle Society.
However, the CFTC claims the funds were not used for legitimate trading as promised. Instead, the defendants misappropriated the money, transferring funds into Saffron’s personal cryptocurrency wallet and using investor funds to pay earlier investors – a hallmark of a Ponzi scheme. The defendants then allegedly lied to participants to cover up the misappropriation.
On October 3, 2019, the court issued an ex parte order freezing assets controlled by Saffron and Circle Society, and preserving relevant records. This restraining order was extended on October 11, 2019. A hearing regarding the Commission’s motion for a preliminary injunction is scheduled for October 29, 2019.
The CFTC is seeking full restitution for defrauded investors, 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. The agency cautions that restitution orders don’t guarantee recovery of lost funds.
The investigation received assistance from the U.S. Attorney’s Office for the District of Nevada, the North Carolina Secretary of State’s Securities Division, and the Federal Bureau of Investigation’s Los Angeles Field Office.
Source: CFTC.gov
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