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April 15, 2021

The SEC has awarded two whistleblowers a joint award of over $50 million for providing information, voluminous documents, and substantial assistance that led to the return of tens of millions of dollars to harmed investors.  According to the SEC, the fraud scheme at issue involved highly complex transactions that would have been difficult for the agency to detect.  SEC

April 8, 2021

Circle Society, Corp. and its owner, David Gilbert Saffron, have been ordered to pay more than $32 million in restitution, disgorgement, and civil monetary penalty for cryptocurrency fraud and misappropriation.  First as an individual, and then through Circle Society, Saffron allegedly solicited millions in Bitcoin and U.S. dollars from at least 179 individuals by making false statements regarding his trading expertise and guaranteed rates of return.  However, rather than trading the fu­nds on foreign currencies and cryptocurrency pairs, Saffron directed­­ portions to his personal cryptocurrency wallet and used other portions to pay prior investors.  CFTC

April 8, 2021

Posted  04/8/21
A man in New Mexico has been ordered to pay over $10.3 million in monetary sanctions and relief after he admitted to running a Ponzi scheme that spanned nearly twenty years.  Instead of investing client funds in U.S. Treasury Bond futures, Douglas Lien misappropriated over $14.2 million from 45 clients, while charging them over $3.5 million in so-called management fees.  Lien has now been permanently banned from...

March 29, 2021

The SEC has awarded an anonymous whistleblower $500,000 based on recoveries in a covered action and a related action that resulted in the shut-down of an ongoing fraudulent scheme. The whistleblower first reported the alleged misconduct to their employer, using the employer’s internal compliance procedures.  Then, within 120 days of reporting the violations internally, the whistleblower submitted a TCR to the SEC.  According to the SEC, the whistleblower provided significant information that prompted it to open an investigation, and provided ongoing assistance to Commission staff.  Separately, the employer began an internal investigation and ultimately made a report to a government agency.  Because the whistleblower reported internally and to the SEC within 120 days of their internal report, the SEC applied its “safe harbor” rule and treated the whistleblower’s SEC submission as if it had been made on the day that the whistleblower reported internally.  SEC

March 26, 2021

British citizen Benjamin Reynolds, who did business as Control-Finance Limited, has been ordered to pay a total of $571 million – $143 million in restitution and $429 million as a civil penalty – by default judgment in an enforcement action brought by the CFTC.  Reynolds solicited customers on the internet and by e-mail, falsely representing that Control-Finance would engage in virtual currency trades on their behalf, with a guaranteed profit.  Reynolds also created an affiliate marketing network, falsely claiming that he would pay referral bonuses to customers.  In fact, Reynolds made no trades on customers’ behalf, earned no trading profits for them, and paid no referral rewards or bonuses. Over the course of six months in 2017, Reynolds secured at least 22,191 bitcoin, worth $143 million at the time, from more than 1,000 customers worldwide, including at least 169 residing in the U.S.  CFTC

March 19, 2021

The CFTC has ordered digital asset exchange operator Coinbase Inc. to pay a civil monetary penalty of $6.5 million to settle charges of reporting false, misleading, or inaccurate information on the company’s GDAX electronic trading platform, which is published by various reporting firms and used by market participants to gauge the volume and liquidity of digital assets.  The CFTC also found Coinbase vicariously liable for a former employee who placed deceptive orders in Litecoin in order to artificially generate market interest.  CFTC

March 4, 2021

Sohrab Sharma, a co-founder of Centra Tech, which claimed to offer products including a debit card that would allow users to make retail purchases using cryptocurrency, has been sentenced to eight years in prison following his guilty plea to charges arising from Centra’s fraudulent representations to participants in its unregistered initial coin offering of “Centra Tokens” or “CTR tokens,” which raised more than $25 million from victims.  Sharma and his co-defendants falsely claimed that Centra Tech had an experienced executive team, agreements with card issuers, and licenses to operate in 38 states when, in fact, Centra Tech had none of these things.  USAO SDNY

February 25, 2021

The SEC has awarded two whistleblowers two awards totaling more than $1.7 million.  Under the first award, one whistleblower received over $900,000 for providing significant evidence, including a critical declaration, that helped shut down an ongoing fraud scheme.  Under the second award, the whistleblower received over $800,000 for providing important information through an interview and documents that helped return millions to harmed investors.  SEC
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