Mosaic Exchange Hit with $1.1M Fine for Crypto Fraud, CEO Faces Ban

Mosaic Exchange Ltd and its CEO Sean Michael have been hit with a $1.1 million fine by the Commodity Futures Trading Commission (CFTC) after a US District Court in Florida entered final default judgments on December 23 and 30, 2024.

The company and its CEO were found to have run a fraudulent cryptocurrency trading operation, defrauded customers and misused their funds.

The CFTC complaint filed in September 2023 alleged Mosaic and Michael made false claims to investors about profit margins, partnerships and assets under management. The exchange used deceptive solicitation tactics to convince customers to invest large sums into a digital asset trading scheme and then misused their funds for personal use. This is another example of unregistered firms taking advantage of the lack of oversight in the crypto space.

Mosaic Exchange’s Deceptive Scheme: Customer Funds Misused

From February 2019 to June 2021 Mosaic Exchange solicited funds from at least 18 customers, promising high returns and partnerships with major cryptocurrency exchanges. But the CFTC found the company fabricated performance data and didn’t deliver on those promises. Instead of investing customer funds as promised, Michael used them for personal expenses, travel and dining.

The court’s order permanently bans both Mosaic and Michael from trading CFTC regulated activities and from registering with the CFTC. This is a big warning to others in the crypto space, deceptive practices will not be tolerated by the regulators.

CFTC’s Growing Focus on Unregistered Crypto Firms

The CFTC’s enforcement action shows its growing focus on unregistered firms in the crypto space. As digital asset investments grow so do the fraudulent schemes targeting unsuspecting investors. The CFTC is urging the public to check the registration status of any firm offering investment opportunities through the NFA database.

In addition to the fine the CFTC is committed to protecting investors by having a whistleblower program that rewards individuals for providing information on fraud. The agency is warning investors to be cautious when dealing with unregistered firms especially those that promise high returns with no oversight.

Key Takeaways:

  • Mosaic Exchange fined $1.1 million for fraudulent crypto activities.
  • CEO Sean Michael permanently banned from CFTC-regulated markets.
  • Public urged to verify investment firms’ registration status to avoid scams.
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Arslan Butt
Index & Commodity Analyst
Arslan Butt serves as the Lead Commodities and Indices Analyst, bringing a wealth of expertise to the field. With an MBA in Behavioral Finance and active progress towards a Ph.D., Arslan possesses a deep understanding of market dynamics.His professional journey includes a significant role as a senior analyst at a leading brokerage firm, complementing his extensive experience as a market analyst and day trader. Adept in educating others, Arslan has a commendable track record as an instructor and public speaker.His incisive analyses, particularly within the realms of cryptocurrency and forex markets, are showcased across esteemed financial publications such as ForexCrunch, InsideBitcoins, and EconomyWatch, solidifying his reputation in the financial community.
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