The Commodity Futures Trading Commission (CFTC) reports that the U.S. District Court for the District of Nevada has entered a default judgment against defendants David Gilbert Saffron and Circle Society, Corp. for a cryptocurrency fraud and a misappropriation scheme. The final judgment is the result of a September 30, 2019 enforcement action brought by the CFTC charging the defendants with fraudulent solicitation, misappropriation, and registration violations.
Saffron is said to be an Australian citizen living in Las Vegas and/or Los Angeles. Circle Society, Corp. is a Nevada based corporation.
The court’s final judgment requires defendants Saffron and Circle Society to pay restitution of $14,841,280 to defrauded pool participants, disgorgement of $15,815,967, and a civil monetary penalty of $1,484,128. The final judgment also permanently enjoins the defendants from engaging in conduct that violates the Commodity Exchange Act and CFTC regulations, registering with the CFTC, trading in any CFTC-regulated markets, and trading in any commodity interest for himself or others.
The court found in its final judgment that the defendants’ ongoing failure to offer any colorable defense to the CFTC’s claims, along with the defendants’ rehashed excuses for their continued failure to comply with the court’s orders throughout the litigation, animate the CFTC’s default-judgment arguments and underlie the court’s conclusion that default judgment is warranted. Previously, the court granted the CFTC’s motion for sanctions arising from the defendants’ contempt and awarded the CFTC attorneys’ fees and expenses.
The CFTC presented evidence that from December 2017 through the present, Saffron fraudulently solicited and accepted at least $15,815,967 worth of Bitcoin and U.S. dollars from at least 179 individuals to trade off-exchange binary options on foreign currencies and cryptocurrency pairs, among other things.
During the early stages of his activity, Saffron created Circle Society and used this entity to perpetrate his fraud.
The CFTC claims that Saffron and Circle Society solicited members of the general public to participate in a commodity pool operated by Circle Society by making false claims of Saffron’s trading expertise and guaranteeing rates of return up to 300%. Rather than using pool participants’ funds to trade as promised, the defendants misappropriated funds, including by holding participants’ funds in Saffron’s personal electronic cryptocurrency wallet and by using funds to pay some participants with the funds of other participants, in a Ponzi scheme.
The CFTC states that the majority of participants have been unable to obtain a return of any of their funds.