The CFTC Takes Action Against Mosaic Exchange for Fraudulent Crypto Scheme
The US Commodity Futures Trading Commission (CFTC) has filed a civil enforcement action against Mosaic Exchange Limited and its owner, Sean Michael. The CFTC alleges that the Pennsylvania-based company operated a fraudulent digital asset commodity scheme from February 2019 to June 2021.
Mosaic Exchange presented itself as a legitimate Bitcoin trading platform with millions of dollars in assets under management (AUM). It solicited funds from 17 US residents and other nationals, claiming to trade the crypto market on their behalf. However, the received funds were misappropriated.
The CFTC found that Mosaic Exchange falsely advertised an in-house proprietary trading algorithm that promised monthly returns of 20% to 60%. Additionally, it claimed to have broker agreements with undisclosed Bitcoin exchange giants. Investigations revealed that these claims were false, and the company acted independently without valid broker agreements.
Investment Scams Remain a Major Issue in the Crypto Market
CFTC Commissioner Kristin N. Johnson referred to the Mosaic Exchange case as a virtual house of cards, highlighting the need for increased investor protection in the crypto industry. Investment scams continue to be prevalent in the market.
A Chainalysis report shows that investment scams have decreased by 77% this year, likely due to increased investor awareness and the exit of two major scam operations. However, ransomware remains a persistent threat, with criminals investing in advanced software to steal funds from crypto wallets.
The US Treasury Department Takes Steps to Combat Crypto Crime
The US Department of the Treasury recently imposed sanctions on three cryptocurrency traders who provided significant support to North Korean cybercriminal group Lazarus Group. These individuals helped convert millions of dollars worth of cryptocurrencies into fiat currency for the criminal organization.
Hot Take: Strengthening Investor Protection and Combating Crypto Crime
The CFTC’s enforcement action against Mosaic Exchange highlights the importance of investor protection in the crypto market. Investment scams remain a major issue, although there has been a decline in recent years. However, ransomware attacks continue to pose a significant threat.
Efforts by regulatory bodies like the CFTC and the US Treasury Department are crucial in combating crypto crime and ensuring the safety of investors’ funds. The industry must continue to prioritize security measures and educate investors to prevent falling victim to fraudulent schemes.
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