CFTC Orders Mosaic to Pay Over $1 Million for Fraudulent Crypto Scheme

According to the CFTC‘s allegations, Mosaic Exchange and Michael falsely claimed to at least 17 investors from the U.S. and other countries that the platform managed tens of millions of dollars in assets and operated a proprietary trading algorithm with an accuracy rate of 82%, delivering monthly profits between 10% and 60%. They also claimed partnerships with well-known cryptocurrency exchanges like BitMEX and Binance. However, the CFTC’s investigation revealed that these claims were fabricated, designed to entice investors into entrusting their Bitcoin and other assets for trading purposes.

The CFTC further noted that Mosaic Exchange failed to achieve the promised profitability and, instead, suffered losses while trading on behalf of its clients. Additionally, Michael misappropriated client funds for personal expenses, including dining and travel, rather than using them for the pledged trading activities. This resulted in substantial financial losses for numerous investors.

The CFTC has filed the lawsuit in the U.S. District Court for the Southern District of Florida, charging Mosaic Exchange and Michael with violations of the Commodity Exchange Act (CEA) and related CFTC regulations. The CFTC seeks restitution for victims, disgorgement of ill-gotten gains, civil monetary penalties, and a permanent ban on the defendants from trading or registering in any CFTC-regulated markets.

In a statement, CFTC Commissioner Kristin N. Johnson emphasized that such fraudulent schemes pose significant risks to investors, especially in the digital asset sector. She called for enhanced investor protection measures to combat Bitcoin fund fraud and safeguard market integrity.

This case serves as a stark reminder for investors to exercise caution when engaging in digital asset investments. Faced with promises of high returns and unverified trading platforms, investors are urged to conduct thorough due diligence and choose regulated financial institutions to avoid falling victim to similar fraudulent schemes.