Bitcoin Ponzi Scheme Take Down Prompts CFTC Warning

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The CFTC has reissued previous advice to help the public evaluate the legitimacy of Bitcoin and cryptocurrency investment opportunities. The warning comes in the wake of a takedown of a company suspected of defrauding $11 million from investors.

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The Commodities Futures Trading Commission (CFTC) has charged the Nevada-based firm, Circle Society, Corp. and its owner, David Gilbert Saffron, with fraudulent solicitation, misappropriation, and registration violations. A civil enforcement action, filed on Wednesday, claims that the company solicited funds from at least 14 investors on the grounds that they would see 300 percent returns on their investment in just weeks.

The firm would apparently use investor funds to trade cryptocurrency and foreign exchange pairs. Company correspondence stressed Saffron’s skill as a binary options trader in an effort to convince investors to part with their cash.

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The filing states that Saffron did not trade investor funds. Bitcoin deposits were reportedly sent to the defendant’s personal wallet.

Circle Society operated from late 2017 until its recent takedown. Given that the company appears to have paid some early investors with funds deposited by newer members, the CFTC states that the company operated “in the manner of a Ponzi scheme.”

The case has prompted the regulator to reissue earlier advice to help investors stay safe. In an article titled “Binary Options Fraud”, it gives various red flags for the public to be aware of, as well as methods of checking out a firm’s legitimacy for oneself.

As part of the recent court filing, the CFTC Chairman Heath P. Tarbert provided comments on the importance of bringing down scams preying on people’s optimism about the future of cryptocurrency. As well as reaffirming the regulator’s commitment to protecting the public, Tarbert added that such scams do a great disservice to the emerging digital asset industry.

Claiming that schemes like Circle Society undermine responsible development in the industry, he stated that the only way for America to lead the new market would be to bring greater integrity to the space.

Recently, the CFTC labeled Ether as a commodity, as BeInCrypto has previously reported.

What do you think about Tarbert’s seemingly pro-cryptocurrency comments? Comment below.


Images are courtesy of Twitter, Shutterstock.

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A former professional gambler, Rick first found Bitcoin in 2013 whilst researching alternative payment methods to use at online casinos. After transitioning to writing full-time in 2016, he put a growing passion for Bitcoin to work for him. He has since written for a number of digital asset publications.

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