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Daily fraud update: 17th October


CFTC charges Circle Society and issues civil enforcement action

A major US regulator has announced that it will issue a civil enforcement action against an organisation which it claims has perpetrated mass-scale fraud.

The Commodity Futures Trading Commission (CFTC) has told David Gilbert Saffron and the Nevada-based company Circle Society that they are being investigated for crimes such as misappropriation, fraudulent solicitation and more.

Now, a federal court has announced that the company will face a restraining order as well as charges of misappropriation and fraudulent solicitation.

Circle Society is accused of operating an $11m binary options scheme.

Binary options are largely discredited in the investment industry and are regularly associated with stories of fraud and crime.

The move comes after courts in the US told the firm two weeks ago that it was facing what is known as an ex-party order which is designed to freeze its assets and ensure that appropriate records are kept.

The next major event in the safe will be a hearing on the CFTC’s Motion for Preliminary Injunction, which will take place on 29th October.

In a statement, CFTC chair Heath P. Tarbert said that the regulator’s job was to ensure that the markets had “integrity”.

“Digital assets and other 21st century commodities hold great promise for our economy”, he said.

“Fraudulent schemes, like that alleged in this case, not only cheat innocent people out of their hard-earned money, but they threaten to undermine the responsible development of these new and innovative markets.

“America must be a leader in this space, and we will only succeed if these markets have integrity”, he added.

Conference set to examine the role of tethers in crypto financing

An unusual conference being held in London next month looks set to examine whether or not crypto tethers are causing problems for the crypto industry.

The OffshoreAlert conference, which is due to take place on the 11th and 12th of November, will look at whether tethers – which are synthetic, US-dollar style additions to crypto markets which have the supposed purpose of creating more liquidity in the markets – are contributing to fraud.

There is already an association between tethers and fraud in the minds of many in the crypto space.

They are made by a firm based in New York called Tether Limited: it and its related firms Bitfinex and iFinex, are currently being looked at by authorities in relation to fraud allegations.

A text released by OffshoreAlert in advance of the conference described tethers as a “massive price manipulation”.

“The fraud…which is ongoing – involves the massive price manipulation of Bitcoin and other major cryptocurrencies like Litecoin, Ethereum, Zcash, and Dash so insiders can clean-up”, it said.

“Bitfinex and ‘stablecoin’ Tether (are) BVI (British Virgin Island)-owned products that provide most of the liquidity for the entire cryptocurrency market”, it added.

Those invited to the conference include finance professionals, regulators, representatives of the media, investigators and more.