Crypto trading platform Mosaic Exchange Limited and its owner ran a "fraudulent digital asset commodity scheme," which included lying about how many assets it had and its profitable track record, according to the Commodity Futures Trading Commission.
That scheme affected at least 17 people in the U.S. and other countries who gave the platform "hundreds of thousands of dollars' worth of bitcoin or other funds" to be used to trade but were then misappropriated, the CFTC said on Thursday in a statement.
From February 2019 through June 2021, the CFTC said Mosaic and its founder Sean Michael falsely said Mosaic was a crypto trading platform with tens of millions of dollars in assets under management, while also offering an algorithm that had profit margins of up to 60 percent a month. The platform and Michael also said they had a "partnership" with BitMEX and Binance, which wasn't true, the CFTC said.
"Mosaic, however, never had a partnership or broker agreement with Binance. Nor did it have a partnership agreement with BitMEX," according to the agency's complaint.
Some customer funds were misappropriated and used for Michael's restaurant and travel expenses, the CFTC said.
'A virtual house of cards'
Mosaic worked "under the guise" that the platform would enter into futures, swaps and leveraged spot transactions, CFTC Commissioner Kristin Johnson said in a statement.
"The entire scheme was a sham, a virtual house of cards," Johnson said.
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