CFTC Accuses Mosaic Founder of Misappropriation of Funds

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  • The CFTC filed a civil enforcement action last week against Mosaic Exchange Limited and its CEO Sean Michael for running a fraudulent digital asset scheme
  • Michael had falsely portrayed Mosaic as a cryptocurrency trading platform with substantial assets and an 82% accurate proprietary trading algorithm
  • Mosaic had no partnerships and no financial backing, with Michael accused of trading with user funds

The Commodity Futures Trading Commission (CFTC) last week filed a civil enforcement action against Mosaic Exchange Limited and its CEO Sean Michael for operating a fraudulent digital asset commodity scheme. The complaint alleges that Michael deceitfully collected hundreds of thousands of dollars from multiple individuals in the US and abroad after pretending that Mosaic was a world-beating crypto exchange when in fact it was him trading the market. Many users have lost all their money, and the CFTC is pursuing various penalties, including restitution, disgorgement, trading bans, and an injunction to prevent further violations of the Commodity Exchange Act and CFTC regulations.

Michael Promised High Returns

According to the CFTC, between approximately February 2019 and June 2021, Michael portrayed Mosaic as a cryptocurrency trading platform managing tens of millions of dollars in assets. He touted a proprietary trading algorithm with an alleged 82% accuracy rate and asserted that it could achieve profit margins ranging from “20% to 60% per month” and 10% to 50+% per month.”

In addition, Mosaic literature also claimed partnerships and broker agreements with various cryptocurrency exchanges when none such existed, using the classic ‘fake partnership’ ‘ruse seen during the ICO boom in 2017.

In stark contrast to these representations, Mosaic lacked the substantial assets it purported to own, failed to deliver the promised trading profitability, and had no legitimate partnerships, ultimately leading to significant financial losses for multiple customers. Many lost all their money and reported the scam to the CFTC, which is seeking disgorgement, penalties, and more from Michael and Mosaic.