On September 30, news from the CFTC’s office shocked the crypto world. Mosaic Exchange Limited, a Pennsylvania limited liability company was found involved in the crypto scam by CFTC. A civil enforcement action has been filed against the company and its owner and CEO, Sean Michael.
What was the scam? What’s wrong with Mosaic Exchange Limited? Let’s find out.
The Whole Crypto Scam
Based on the complaint of CFTC, Mosaic Exchange Limited was laboriously involved in the crypto scam, operating a fraudulent crypto commodity scheme using investors and crypto funds. Mosaic Exchange Limited is a cryptocurrency exchange platform holding tens of millions of dollars in assets under management. The company was introduced by Sean Michael to help investors and customers with cryptocurrency exchanges and trading. The company fraudulently solicited and convinced around 17 crypto enthusiasts from the US and other nations to invest hundreds of thousands of dollars worth of Bitcoin and other digital assets.
According to CFTC, Mosaic Exchange Limited was involved in illegal activities from February 2019 to June 2021 by making a false representation of the exchange. As a cryptocurrency exchange, it is unethical for the firm to use the investors’ funds for its own use. The funds received from the investors and customers were supposed to be traded on behalf of the customers, representing the inappropriate use of customers’ funds.
In addition to this, Mosaic Exchange Limited also advertised profit margins ranging from “20% to 60%”. The company was involved in fraudulent scams for a long time using the customer’s funds in a indecent manner. Mosaic Exchange Limited also incurred losses while trading with the customers’ funds, according to CFTC.
Also, the company mentioned its partnerships and broker agreements which was a complete lie. Result of this, several customers of Mosaic Exchange Limited suffered a complete loss of funds.
Action of CFTC Commissioner
Considering all the illegal and unethical actions of Mosaic Exchange Limited in mind, CFTC filed a civil enforcement action against the firm and its owner.
CFTC charged Mosaic Exchange Limited with various remedies including civil monetary penalties, restitution, disgorgement, permanent injunction against further violations of CEA, and permanent trading and registration bans.
Kristin N. Johnson, the CFTC commissioner, has issued a statement focusing on the importance of “protecting investors from fraud action”. The commissioner tried to make the investors and customers aware of the fraudulent activities taking place in the crypto industry.
Kristin considered the report of Chainanalysis, a blockchain analysis firm that identified many of the crypto scams. The report revealed the fraud of around $5.9 Million in the previous year. Using customers and investors for their own trading has emerged as one of the biggest types of scams in the crypto world.
Apart from this, the commissioner also highlighted the scam actioned by Mosaic Exchange Limited. The company traded the customers’ funds on platforms including Binance and BitMEX. Both platforms are already charged by the CFTC for regulatory violations.
Conclusion
Mosaic Exchange Limited, a cryptocurrency exchange platform, was alleged to have performed a crypto scam. CFTC charged the company with permanent trading and registration bans, penalties, restitution, and disgorgement,
Nancy J. Allen is a crypto enthusiast and believes that cryptocurrencies inspire people to be their own banks and step aside from traditional monetary exchange systems. She is also intrigued by blockchain technology and its functioning.
Source: https://www.thecoinrepublic.com/2023/10/02/scam-cftc-filed-civil-action-against-mosaic-exchange-limited/