- A recently outed $25 million crypto scam has ties to a 2017 operation that caught the attention of the US Commodity Futures Trading Commission
- Circle Society, operated by David Saffron, was part of several entities soliciting millions in investments in 2017 and 2018
- Saffron and co-conspirator Vincent Mazzotta Jr. now face charges for swindling over $25 million through the connected entity, Federal Crypto Reserve
A $25 million crypto scam whose founders were recently charged with multiple counts of fraud has links to a 2017 scam that drew the attention of the US Commodity Futures Trading Commission (CFTC). Circle Society was one of a number of entities that Australian national David Saffron operated in 2017 and 2018 and which solicited millions in investments from victims, and it seems that a CFTC charge wasn’t enough to deter him; Saffron and co-conspirator Vincent Mazzotta Jr. were last week charged with swindling over $25 million through a connected entity, Federal Crypto Reserve.
Saffron Was Pulled up in 2019
Circle Society operated in 2017 and 2018 alongside Bitcoin Wealth Management, Omicron Trust, Mind Capital, and Cloud9Capital, all of which were fronts that Saffron used to try and con people out of their money by pretending he was investing in cryptocurrencies. In 2019, the CFTC filed a civil enforcement action against Saffron and Circle Society, Corp. with fraudulent solicitation, misappropriation, and registration violations relating to an $11 million binary options scheme Saffron operated through the Nevada-registered company.
According to the 2019 complaint, Saffron fraudulently solicited funds from at least 14 members of the public to participate in a pool operated by Circle Society, an entity Saffron created and used to perpetrate his fraud. Saffron guaranteed returns of up to 300%, based on his non-existent trading prowess, claims he used to solicit tens of millions more from other victims through his other schemes.
Instead of investing the money, Saffron, and later Mazzotta Jr., allegedly diverted funds for personal luxuries, including private jets and mansions. To conceal their actions, they created a fictitious entity, the Federal Crypto Reserve, which had a more sinister modus operandi: they convinced the victims of their crimes to pay the Federal Crypto Reserve to investigate the disappearance of their money. Naturally, the Reserve never was able to produce results, and the pair kept the money.
Pair Face Decades in Prison
The indictment also accuses Saffron and Mazzotta Jr. of obstructing justice and concealing cryptocurrency investments using techniques like “blockchain hopping” and mixing services. The charges against them include conspiracy to commit wire fraud, wire fraud, conspiracy to obstruct justice, conspiracy to commit money laundering, and money laundering.
Saffron, facing additional charges for felonies during pre-trial release, could be imprisoned for up to 10 years consecutively. If convicted, both face a maximum of 20 years for each wire fraud and money laundering count, 10 years for each money laundering charge, and five years for conspiracy to obstruct justice.
