US court orders Bitcoin-pyramid organizers to pay more than $32 million

A U.S. district court in Nevada issued a default judgment against Circle Society and its owner, David Gilbert Safron, on charges of cryptocurrency fraud and misappropriation.

ENFORCEMENT NEWS: Federal court orders Nevada company and its owner to pay more than $32 million for cryptocurrency fraud and misappropriation scheme. More here: https://t.co/01hamENYnM

— CFTC (@CFTC) April 8, 2021

The case was referred to the U.S. Commodity Futures Trading Commission (CFTC), which said that under the verdict the Nevada corporation and the Australian citizen living in the United States must pay more than $32 million in total.

According to the CFTC, Safron fraudulently solicited $15,815,967 from 179 investors in Bitcoin and dollars since December 2017. The funds were allegedly used to trade in over-the-counter binary options on the Forex market and in cryptocurrency pairs.

To promote the scheme, the Australian founded Circle Society as a pool-operator, luring investors. He falsely claimed the firm’s trading experience and promised returns of up to 300%, the regulator noted.

According to the CFTC, Safron did not use the pool participants’ funds for trading. He held the cryptocurrency in his personal wallet and directed part of the assets to payments to some investors, as in a Ponzi scheme.

\”However, most participants could not recover any of their funds despite repeated demands,\” the agency said.

Under the judgment, the defendants must pay restitution to defrauded investors totaling $14,841,280, return the ill-gotten gains of $15,815,967, and pay $1,484,128 in civil penalties.

The CFTC warned victims that restitution may not necessarily lead to full compensation, as the wrongdoers may not have enough money or assets.

Earlier in March, a U.S. court ordered the organizer of the cryptocurrency pyramid Control-Finance, Benjamin Reynolds to pay compensation and a civil penalty totaling $572 million.

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