The U.S. Commodity Futures Trading Commission (CFTC) has taken a major step toward the cryptocurrency industry, filing a civil enforcement action against Pennsylvania limited liability company Mosaic Exchange Limited and its owner and CEO Sean Michael.
The complaint alleges that the defendants operated a fraudulent digital asset commodity scheme that defrauded investors and misappropriated customer funds.
Alleged fraudulent cryptocurrency scheme
The complaint alleges that the defendants fraudulently solicited and induced 17 individuals from the United States and other countries to invest hundreds of thousands of dollars worth of Bitcoin (BTC) and other funds.
The funds were supposed to trade Bitcoin and other crypto assets on behalf of clients. However, the defendants allegedly misappropriated client funds for their own benefit.
The case background shows that between approximately February 2019 and June 2021, the defendants made false statements about Mosaic Exchange. They claimed that Mosaic was a cryptocurrency trading platform that managed a large amount of assets and provided a proprietary trading algorithm with an accuracy rate of up to 82%.
In addition, they claimed that their profit margins were high, ranging from "20% to 60% per month" to "10% to over 50% per month." The defendants also claimed to have established partnerships or brokerage agreements with specific cryptocurrency trading exchanges.
However, as alleged in the complaint, these representations were fraudulent. Mosaic Exchange did not have the assets under management it claimed, nor did it have the profitable trading record it advertised.
According to the CFTC, Mosaic suffered losses while trading on behalf of its clients. Additionally, the company did not have the partnership or broker agreements it promoted. As a result, some clients lost all of their investment funds.
CFTC Commissioner Calls for Tighter Regulation
On this issue, Commissioner Kristin N. Johnson issued a statement emphasizing the importance of “protecting investors from fraudulent activity” in the emerging crypto industry.
Commissioner Johnson highlighted the inherent risks of cryptocurrency fraud and stressed the need to protect vulnerable investors. Johnson cited Chainaanalysis, a blockchain analytics firm that counts scams as the most prevalent form of cryptocurrency-based crime.
The report estimates that fraud resulted in losses of more than $5.9 billion last year alone. Investment scams in particular were considered the worst, with scammers luring victims with promises of high returns.
Johnson highlighted the case of Mosaic Exchange, which traded digital asset derivatives on platforms such as BitMEX and Binance, which the U.S. Commodity Futures Trading Commission (CFTC) had previously accused of regulatory violations.
In light of these developments, Commissioner Johnson believes that the CFTC should use its existing authority to develop regulations to address any potential gaps in regulation in these changing market structures.
As a result, the CFTC seeks a variety of remedies through its litigation, including restitution, disgorgement of ill-gotten gains, civil monetary penalties, permanent trading and registration bans, and a permanent injunction against further violations of the Commodity Exchange Act (CEA) and CFTC regulations. #加密诈骗 #CFTC
