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A crypto firm has been fined $1.1 million for deceiving customers and misusing funds, as the CFTC highlights growing concerns about unregistered investment schemes.
CFTC Strikes: Fraudulent Crypto Firm Banned, $1.1 Million Fine Issued
The Commodity Futures Trading Commission (CFTC) announced on Monday that Mosaic Exchange Ltd. and its CEO, Sean Michael, have been ordered to pay over $1.1 million in penalties for operating a fraudulent digital asset trading scheme. The U.S. District Court for the Southern District of Florida issued final default judgments on Dec. 23 and 30, 2024, following a CFTC complaint filed in September 2023. The defendants were charged with deceptive solicitation practices and misappropriation of customer funds, in violation of the Commodity Exchange Act (CEA).
As part of the judgment, the court found Mosaic and Michael liable for their misconduct. The CFTC stated:
The default judgment order requires them to pay jointly and severally approximately $468,600 in restitution, $60,980 in disgorgement, and a $660,000 civil monetary penalty.
“The order also permanently enjoins them from engaging in conduct that violates the CEA, as charged, and permanently bans them from registering with the CFTC and from trading in any CFTC-regulated markets,” the U.S. regulator added.
From February 2019 to June 2021, the defendants solicited funds from 18 customers with false claims about profit margins, assets under management, and partnerships with cryptocurrency exchanges. The CFTC explained that evidence revealed that Mosaic fabricated its performance metrics, while Michael used customer funds for personal expenses such as travel and dining.
The CFTC reiterated its commitment to protecting investors and advised the public to verify firms’ registration through the National Futures Association database before investing. Suspicious activities can be reported to the CFTC via a hotline or its whistleblower program, which offers monetary rewards for actionable tips. The agency emphasized that fraud involving unregistered firms offering investments in commodity pools is a growing issue and urged the public to exercise caution.