Release Number 8789-23
CFTC Charges Mosaic Exchange Limited and Sean Michael with a Fraudulent Solicitation and Digital Asset Commodities Trading Scheme
September 27, 2023
Washington, D.C. — The Commodity Futures Trading Commission today announced it filed a civil enforcement action in the U.S. District Court for the Southern District of Florida against Mosaic Exchange Limited, a Pennsylvania limited liability company, and its owner and Chief Executive Officer Sean Michael, presently or formerly of Boca Raton, Florida, for running a fraudulent digital asset commodity scheme.
The complaint alleges the defendants fraudulently solicited and induced at least 17 people in the U.S. and other countries to give them hundreds of thousands of dollars’ worth of bitcoin or other funds for the defendants to trade bitcoin and other digital asset commodities on the customers’ behalves, and misappropriated customer funds.
In its continuing litigation, the CFTC seeks restitution, disgorgement, civil monetary penalties, permanent trading and registration bans, and a permanent injunction against further violations of the Commodity Exchange Act (CEA) and CFTC regulations, as charged.
According to the complaint, from approximately February 2019 through June 2021, the defendants falsely represented and advertised, among other things, that Mosaic was a cryptocurrency trading platform with tens of millions of dollars in assets under management; offered a Mosaic-designed proprietary trading algorithm to trade that was purportedly 82% accurate, and purportedly had profit margins at various times ranging from “20% [to] 60% per month” and “10% to 50+% per month”; and had partnerships or broker agreements with certain cryptocurrency trading exchanges. The defendants made these false representations while Mosaic was acting as a commodity pool operator (CPO) and Michael was acting as an associated person of a CPO.
As alleged in the complaint, in actuality, Mosaic was not a trading platform with tens of millions of dollars of assets under management; Mosaic did not have the track record of trading profitability as represented, but instead it lost money trading for customers; and Mosaic did not have partnership or broker agreements with the cryptocurrency exchanges as the defendants had advertised. As a result, a number of customers lost all of their money.