Release Number 8377-21
Federal Court Orders Nevada Company and its Owner to Pay More Than $32 Million for Cryptocurrency Fraud and Misappropriation Scheme
April 08, 2021
Washington, D.C. — The Commodity Futures Trading Commission today announced that following a hearing on the merits, the U.S. District Court for the District of Nevada entered a default judgment against defendants David Gilbert Saffron, an Australian citizen residing in Las Vegas, Nevada and/or Los Angeles, California, and Circle Society, Corp., a Nevada corporation, for a cryptocurrency fraud and misappropriation scheme.
The court’s March 29, 2021 final judgment requires defendants Saffron and Circle Society, jointly and severally, 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 articulated its findings and conclusions on the record during a hearing on the merits of the CFTC’s motion for default judgment.
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 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. [See CFTC Press Release No. 8053-19]
In its motion for default judgment, 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 (forex) 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. According to the CFTC complaint and motion for default judgment, 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 the manner of a Ponzi scheme. The majority of participants, however, have been unable to obtain a return of any of their funds despite their repeated demands.
The CFTC cautions victims that restitution orders may not result in the recovery of any money lost because the wrongdoers may not have sufficient funds or assets.
The CFTC appreciates the assistance of the U.S. Attorney’s Office for the District of Nevada and the North Carolina Secretary of State’s Securities Division.
Division of Enforcement staff members responsible for this case are Danielle Karst, Timothy J. Mulreany, George H. Malas, Hillary Van Tassel, and Paul G. Hayeck.