The federal court in Florida has ordered Mosaic Exchange Ltd. and its CEO, Sean Michael, to pay over $1.1 million in penalties and restitution for their involvement in a fraudulent digital asset trading scheme.
The court found that Mosaic Exchange and Michael misled investors by making false claims regarding the company's assets under management, trading performance, and partnerships with established cryptocurrency exchanges. The scheme attracted 18 investors through promises of high returns and impressive trading statistics, which were later revealed to be based on hypothetical projections rather than actual trading results.
The court's final default judgments, issued in late December, highlight the deceptive practices that targeted investors across multiple countries from February 2019 to June 2021. The financial penalties imposed by the court include approximately $468,600 in restitution to defrauded customers, $60,980 in disgorgement of ill-gotten gains, and a substantial civil penalty of $660,000.
In addition to these monetary penalties, the court's order permanently enjoins Mosaic and Michael from engaging in any conduct that violates the Commodity Exchange Act. Furthermore, they are banned from registering with the CFTC and from trading in any CFTC-regulated markets.
The Mosaic Exchange case is part of a broader trend of regulatory enforcement in the cryptocurrency sector, which has seen a surge in fraudulent schemes targeting unsuspecting investors. These cases highlight the urgent need for regulatory oversight in the rapidly evolving cryptocurrency market, as fraudulent activities continue to proliferate, often at the expense of vulnerable investors.