Case 2:19-cv-01697-JAD-DJA Document 1 Filed 09/30/19 Page 1 of 23

Danielle E. Karst (D.C. Bar No. 481881) 

1 Timothy J. Mulreany (Maryland Bar No. 8812160123) 

COMMODITY FurURES TRADING COMMISSION 

__ FILED 

_ENTERED 

r--__ CO_U_NS_EL;_/;1-1_?·;_;,c_:_s _~,- __ ,.,,,J 

2 Three Lafayette Centre 

1155 21st Street, N.W. SEP 3 0 2019 

3 Washington, D.C. 20581 

Telephone: (202) 418-6158 (Karst) 

4 Telephone: (202) 418-5306 (Mulreany) 

Facsimile: (202) 418-5523 

5 dkarst@cftc.gov 

CLERK US DISTRICT COURT 

DISTRICT OF NEVADA 

L.:::.:BY:.:.:: ========--=---=--=-----=--:--:--.:-:-. ___ r.~""""I.' 

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tmulreany@cftc.gov 

UNITED STATES DISTRICT COURT 

DISTRICT OF NEV ADA 

COMMODITY FUTURES TRADING 

COMMISSION, 

Plaintiff, 

V. 

DAVID GILBERT SAFFRON 

a/k/a DAVID GILBERT and 

CIRCLE SOCIETY, CORP., 

Defendants. 

Case No. 

2: 19-cv-01697-KJD-DJA 

COMPLAINT FOR INJUNCTIVE 

RELIEF, RESTITUTION, 

DISGORGEMENT AND CIVIL 

MONETARY PENAL TIES UNDER THE 

COMMODITY EXCHANGE ACT 

Plaintiff, Commodity Futures Trading Commission ("CFTC" or "Commission"), by and 

through its attorneys, alleges as follows: 

I. SUMMARY 

1. From at least December 2017 through the present (the "Relevant Period"), David 

Gilbert Saffron a/k/a David Gilbert ("Saffron"), has engaged in a fraudulent scheme to solicit 

Bitcoin and United States Dollars ("USD") from members of the public to participate in a pooled 

investment vehicle ("commodity pool" or "Pool") for trading commodity interests, including 

trading binary options contracts on foreign currency ("forex") and cryptocurrency pairs. 

2. During the early stages of his activity, Saffron individually created a business 

entity, Circle Society, Corp. ("Circle Society''), on or about September 6, 2018, and used this 

entity to perpetuate his fraud. Beginning on or about September 6, 2018 through the present, 

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Saffron, individually and as principal and agent of Circle Society ( collectively, "Defendants"), 

has fraudulently solicited members of the public to participate in a commodity pool operated by 

Circle Society. 

3. During the Relevant Period, Saffron, and from September 6, 2018 through the 

present, Defendants, by and through Saffron, have accepted at least $11 million worth of Bitcoin 

and USD (Bitcoin, together with USD, "funds") from no fewer than fourteen members of the 

public to participate in their unregistered commodity pool, which Defendants referred to as the 

"System" or as one of the purported Circle Society investment plans. Rather than using pool 

participants' funds to trade in binary options contracts as promised, Defendants have 

misappropriated participants' funds (including by retaining participants' funds in Saffron's 

personal E-Wallet and by using funds to pay other participants) and lied to participants in order 

to conceal Defendants' misappropriation. 

4. In furtherance of their fraudulent scheme, Defendants have made material 

omissions and misrepresentations in solicitations to actual and prospective pool participants, 

including misrepresenting Saffron's experience and track record and misrepresenting that pool 

participants' funds would be pooled and invested in, among other things, binary options trading 

for the benefit of participants. 

5. Contrary to Defendants' representations, Defendants have misappropriated certain 

pool participants' funds by soliciting funds for trading and then retaining such funds in Saffron's 

personal E-W all et instead of using them to trade on behalf of the Pool as promised. Defendants 

did not conduct trading on behalf of participants as promised. Defendants also misappropriated 

some portions of participants' funds by providing Bitcoin to earlier-in-time participants using the 

Bitcoin oflater-in-time participants to perpetuate their fraud, in the nature of a "Ponzi" scheme. 

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6. Saffron acted and continues to act at all times during the Relevant Period as a 

commodity pool operator ("CPO") without being registered with the CFTC, as required by the 

Commodity Exchange Act ("Act"). From September 6, 2018 through the present, Circle Society 

acted and continues to act as a CPO without being registered with the CFTC, and Saffron acted 

and continues to act as an associated person ("AP") of CPO Circle Society without being 

registered with the CFTC, as required by the Act. 

7. By this conduct, and the conduct further described herein, Defendants have 

engaged, are engaging and/or are about to engage in acts and practices in violation of Sections 

4c(b), 4k(2), 4m(l), and 4a(l)(A)-(B) of the Act, 7 U.S.C. §§ 6c(b), 6k(2), 6m(l), 6a(l)(A)-(B) 

(2012), and CFTC Regulations ("Regulation(s)") 4.20(a)(l), (b) and (c), and 32.4, 17 C.F.R. 

§§ 4.20(a)(l), (b), (c), and 32.4 (2019). 

8. The acts and omissions described herein have all been done by Saffron in the 

scope of his employment or office at Circle Society during the September 6, 2018 through the 

present timeframe. Therefore, Circle Society is liable for all acts and omissions described 

herein, pursuant to Section 2(a)(l)(B) of the Act, 7 U.S.C. § 2(a)(l)(B) (2012), and Regulation 

1.2, 17 C.F .R. § 1.2 (2019). 

9. Saffron was a controlling person of Circle Society and did not act in good faith or 

knowingly induced Circle Society's violations of the Act and Regulations described herein 

during the September 6, 2018 through the present timeframe. Therefore, Saffron is liable for 

Circle Society's violations of the Act and Regulations, pursuant to Section 13(b) of the Act, 

7 U.S.C. § 13c(b) (2012). 

10. Accordingly, pursuant to Section 6c of the Act, 7 U.S.C. § 13a-1 (2012), the 

26 CFTC brings this action to enjoin Defendants' unlawful acts and practices and to compel their 

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compliance with the Act and the Regulations promulgated thereunder. In addition, the CFTC 

seeks civil monetary penalties and remedial ancillary relief, including, but not limited to, trading 

and registration bans, restitution, disgorgement, rescission, pre- and post-judgment interest, and 

such other and further relief as the Court deems necessary and appropriate. 

11. Unless restrained and enjoined by this Court, Defendants will likely continue to 

engage in acts and practices alleged in this Complaint and similar acts and practices, as described 

below. 

II. JURISDICTION AND VENUE 

12. This Court possesses jurisdiction over this action pursuant to 28 U.S.C. § 1331 

(2012) (codifying federal question jurisdiction) and 28 U.S.C. § 1345 (2012) (providing that U.S. 

district courts have original jurisdiction over civil actions commenced by the United States or by 

any agency expressly authorized to sue by act of Congress). In addition, Section 6c of the Act, 

7 U.S.C. § 13a-1 (2012), provides that U.S. district courts possess jurisdiction to hear actions 

brought by the CFTC for injunctive relief or to enforce compliance with the Act whenever it 

shall appear that such person has engaged, is engaging, or is about to engage in any act or 

practice constituting a violation of any provision of the Act or any rule, regulation, or order 

thereunder. 

13. Venue lies properly with this Court pursuant to Section 6c(e) of the Act, 7 U.S.C. 

§ 13a-l(e) (2012), because Defendants resided and transacted business in this District, and 

certain transactions, acts, practices, and courses of business alleged in this Complaint occurred, 

are occurring, or are about to occur in this District. 

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III. THE PARTIES 

14. Plaintiff Commodity Futures Trading Commission is an independent federal 

regulatory agency charged by Congress with the administration and enforcement of the Act, 

7 U.S.C. §§ 1-26 (2012), and the Regulations promulgated thereunder, 17 C.F.R. pts. 1-190 

(2019). 

15. Defendant David Gilbert Saffron is a citizen of the Commonwealth of Australia 

and sometimes uses the alias "David Gilbert." Saffron's last known residence is in Las Vegas, 

Nevada. Saffron has never been registered with the CFTC in any capacity. 

16. Defendant Circle Society, Corp. is a Nevada corporation based in Henderson, 

Nevada. Circle Society, Corp. was incorporated by Saffron on September 6, 2018, with a 

purported office at 2450 St. Rose Parkway, Suite 120, Henderson, Nevada. Circle Society, Corp. 

has never been registered with the CFTC in any capacity. 

IV. STATUTORY BACKGROUND 

17. Through Section 4c(b) of the Act, 7 U.S.C § 6c(b) (2012), Congress has given the 

CFTC jurisdiction and plenary rulemaking authority over all commodity option transactions. 

18. Binary options are "options," as defined by Section la(36) of the Act, 7 U.S.C. 

§ la(36) (2012), and binary options on commodity futures and "commodities," as defined by 

Section la(9) or (19) of the Act, 7 U.S.C. § la(9), (19) (2012), are commodity option 

transactions pursuant to Section 4c(b) of the Act, 7 U.S.C § 6c(b) (2012), and Regulation 32.2, 

17 C.F.R. § 32.2 (2019). 

19. 7 U.S.C. § 6c(b) makes it unlawful for any person to offer to enter into, enter into, 

25 or confirm the execution of any transaction involving any commodity regulated under the Act 

26 which is of the character of, or is commonly known as, inter alia, an "option," "bid," "offer," 

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"put," or "call," contrary to any rule, regulation, or order of the CFTC prohibiting any such 

transaction or allowing any such transaction under such terms and conditions as the CFTC shall 

prescribe. 

20. Section 2(c)(2)(B)(i)(I) and (11), 7 U.S.C. § 2(c)(2)(B)(i)(I), (II) (2012), provides 

in relevant part that the Act applies to, and the CFTC shall have jurisdiction over, an agreement, 

contract or transaction in foreign currency ("forex") that is an option and is offered to, or entered 

into with, a person that is not an eligible contract participant ("ECP"), unless the counterparty, or 

the person offering to be the counterparty, of the person is one of the enumerated exceptions not 

applicable here. 

21. An ECP is defined by 7 U.S.C. § la(18)(A)(xi) (2012), in relevant part, as an 

individual who has amounts invested on a discretionary basis, the aggregate of which is in excess 

of $10,000,000, or $5,000,000 and who enters into the agreement, contract or transaction to 

manage the risk associated with an asset owned or a liability incurred, or reasonably likely to be 

owned or incurred, by the individual. 

V. FACTS 

18 A. The Fraudulent Scheme 

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22. During the Relevant Period, Saffron, and from September 6, 2018 through the 

present, Defendants, by and through Saffron, solicited at least $11 million worth of funds from 

no fewer than fourteen participants for the purpose of participating in a commodity pool, which 

purportedly traded binary options contracts on forex and cryptocurrency pairs, among other 

things. Defendants knowingly and falsely represented to actual and prospective pool participants 

that Saffron was an experienced trader producing consistent, high rates of return, including for 

well-known investors such as Mark Cuban. 

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23. Saffron used various business entities and trade names, including "Bitcoin Wealth 

Management," "Omnicron Trust" (or alternatively, "Omicron Trust"), and "Circle Society" to 

perpetuate his fraud. Defendants solicited and continue to solicit actual and prospective 

participants through in-person meetings, word-of-mouth, instant messaging services such as 

Telegram, podcasts, and websites operated by Saffron including https://circlesociety.com. 

24. In a January 2018 video recording of Saffron's presentation to actual and 

prospective participants, Saffron performed a hypothetical trading demonstration on a laptop 

computer using a "BinBot Pro" trading platform and stated in pertinent part: 

The more bots I have running, the more money it is for the bank. Literally, it's 

like printing money. Every thirty seconds, you're making on average anywhere 

between 1 and 400 fiat [currency], or you're making 1 and 400 Bitcoin. 

25. Saffron claimed in his solicitations to actual and prospective participants that he 

used "BinBot Pro" to trade forex and cryptocurrency options pairs. In his solicitations, Saffron 

failed to advise actual and prospective customers that "BinBot Pro" is a forex and cryptocurrency 

trading platform, and that it is unlawful to use it in the United States. Saffron failed to advise 

actual and prospective customers that the "BinBot Pro" website contains a disclaimer stating in 

relevant part: "BinBot Pro nor its agents or partners are not registered and do not provide any 

services on the US territory [sic]." 

26. Similarly, in a January 2018 audio recording of another presentation to actual and 

prospective participants, Saffron stated in pertinent part: 

The System basically is any money you put in, within seven calendar daysseven days from when you put it in-you get your outlay back. So whatever you 

put in, you get your outlay back, fourteen days after that you get two-to-one on 

your money. Okay, so you're getting three-to-one on whatever position you have; 

it can go from one Bitcoin all the way to 10,000 Bitcoin, whatever it is. And I 

deal with all ranges. 

My personal portfolio as you've seen has over $717 million ... company 

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portfolio is about $2 billion. My liquid outlay per day is anywhere between $2 

million and $5 million ... I know who to call, and I just know how to do things, 

but I don't know this town yet because I'm integrated in Los Angeles. So you 

guys know this town. Perfect. Now I can make you all damn rich. 

Test the System out at first; I'll give you a three-day outlay return, just to show 

you it works. So three days, you'll have your full return, outlay and two-to-one. 

Any money you give me, half a Bitcoin, $1,000, $2,000, $500 whatever you have 

I will triple it·in three days and hand it back to you. Then, you can go to your 

people and go, 'this works.' Any person you bring to me, I'll give you one-to-one 

on whatever they put in. So you bring someone who has three Bitcoin, he puts 

three Bitcoin in, fourteen days and then seven-day outlay return, and then another 

fourteen days, seven days on that outlay return, he gets his money,· you get yours. 

Okay? Very simple. 

[Question by Prospective Participant]: How ... you're probably overwhelmed 

with people bringing you clients at this point? 

[Saffron's Answer]: Yes, I am. I don't want a client list from you. You're going 

to deal with the clients, okay. A client comes to you and goes, 'how the fl<*k do I 

get in this?' I want fifty Bitcoins to go to this guy. Okay. You go, 'I've got Jim 

who is putting in fifty Bitcoins.' I set up a wallet for Jim, send you a wallet 

address. He can check it on the computer its zero transactions. It's his personal 

wallet. He puts in the fifty Bitcoin. I send you a contract back, it says fifty 

Bitcoin received 12:04 pm. Fifty Bitcoin would be deposited back into wallet 

address on Friday, whatever date and fifty Bitcoin will be given to you as your 

commission. It's one-to-one. So understand the concept of that, okay that's 

money, millions within a month. 

27. As noted above in the January 2018 audio recording, Saffron falsely guaranteed 

actual and prospective participants a return of three hundred percent (300%) on their investment 

in three weeks. On an annualized, compounded basis, this equals a rate of return on investment 

in excess of 186 million percent (186,000,000%). 

28. To induce actual and prospective participants to give Defendants their assets to 

purportedly pool and trade on their behalf, Defendants encouraged participants to recommend 

and refer others to participate in the fraudulent scheme. Defendants sometimes promised actual 

and prospective participants a "referral fee" of one Bitcoin for every Bitcoin they induced their 

friends and acquaintances to invest. At other times, Defendants promised actual and prospective 

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participants a "referral fee" equal to twenty percent (20%) of the assets invested by their friends 

and acquaintances. 

29. Most recently, Defendants have solicited participants through the Circle Society 

website, https://circlesociety.com ("Website"). Through the Website, Defendants offer 

participants various investment plans such as "Weel<ly BTC," "Year of the Pig," and "The Power 

of 3." The plans vary by amount required to be invested and guarantee rates of return within a 

specified time period. For example, the Website states that "The Power of 3" provides "Returns 

300% in 45 days! business days" and "Year of the Pig" provides "Returns 188% in 38 days! 

business days." 

30. Through the Circle Society website, participants can transfer their Bitcoin to 

Circle Society from the participants' own cryptocurrency wallets. Participants who deposit 

Bitcoin through the Website are able to log into the Website to view their purported account 

balance with Circle Society, denominated in Bitcoin. 

31. At Defendants' instruction, pool participants provided at least $11 million in 

funds to Defendants via a Bitcoin wallet address controlled by Saffron and/or through the Circle 

Society website. Some participants also provided USD to Saffron directly. 

32. Defendants misappropriated pool participants' funds by soliciting funds for 

trading on behalf of the Pool and then holding participants' funds in Saffron's personal E-Wallet 

instead of segregating the funds in a pool account and using the funds to trade on behalf of the 

Pool. 

33. At no time did Defendants create or operate the Pool as an entity cognizable as a 

25 legal entity separate from the pool operator. As a result, at no time were any funds from pool 

26 participants received in the Pool's name because a separate pool was never created. 

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34. During the Relevant Period, Saffron, and from September 6, 2018 through the 

present, Defendants, by and through Saffron, failed to maintain pool funds separately from 

Saffron's own funds. Defendants commingled pool participants' funds with personal funds of 

Saffron. As described above, pool participants deposited funds into a Bitcoin wallet address 

controlled by Saffron and/or through the Circle Society website. Defendants then held these 

funds in Saffron's personal E-W all et instead of segregating them in a pool account. 

B. Material Omissions and Misrepresentations of Material Facts 

35. In furtherance of the fraudulent scheme, Defendants knowingly made and 

continue to make material omissions of fact in solicitations and other communications with 

actual and prospective pool participants, including by failing to disclose that: 

a. Defendants misappropriated pool participants' funds by soliciting funds for trading 

and then retaining participants' funds in Saffron's personal E-Wallet instead of 

segregating the funds in a pool account and using the funds to trade on behalf of the 

Pool; 

b. Defendants were not registered with the CFTC as required by the Act and were 

therefore operating an unlawful business enterprise; and 

c. Purported "returns" paid to some pool participants were in fact the principal deposits 

of other participants and were not generated by profitable trading. 

36. Similarly, Defendants misrepresented and continue to misrepresent material facts 

in their solicitations and other communications with actual and prospective pool participants, 

including by mispresenting that: 

a. Pool participants' funds would be pooled and used to trade binary.options contracts, 

among other things, for the benefit of participants; 

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C. 

b. Guaranteed profits would be paid to participants (e.g., up to a 300% return every 

three weeks); and 

c. Guaranteed referral fees would be paid to participants in the amount of one Bitcoin 

for every Bitcoin and/or equal to twenty percent (20%) of the assets invested by their 

friends and acquaintances. 

Defendants' Misappropriation and Refusal to Return Participants' Funds 

37. As described above, Defendants misappropriated participants' funds by soliciting 

funds for trading and then holding participants' funds in Saffron's personal E-Wallet instead of 

segregating the funds in a pool account and using them for trading on behalf of the Pool. 

Defendants did not disclose to actual and prospective participants that they misappropriated and 

used their funds for Saffron's personal use. 

38. The Bitcoin tendered by participants to Defendants were held in Saffron's 

personal E-Wallet and were never placed in any cryptocurrency or other trading accounts for the 

benefit of the Pool. Similarly, at least some of the USD tendered by participants to Defendants 

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accounts for the benefit of the Pool. 

39. Defendants did not use the funds solicited and accepted from participants to trade 

on behalf of the Pool as promised. 

40. Defendants also misappropriated some portions of participants' funds by 

providing Bitcoin to certain participants as purported trading "profits," in order to create the 

illusion that the Pool was trading, and trading profitably. For example, in early-January 2018, 

one participant provided Saffron with ten Bitcoin (worth approximately $150,000 at the time), 

and Saffron returned thirty Bitcoin (worth approximately $450,000 at the time) to this participant 

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as purported "profits" within twenty-four hours. This participant then touted these results to 

induce other members of the public to invest with Saffron. 

41. Other pool participants made and continue to make repeated demands on 

Defendants for the return of their funds. None of the participants received any "profits" within 

three weeks or at any other time. The majority of participants have been unable to obtain a 

return of any of their funds. 

42. Defendants attempted to perpetuate the fraud and conceal their misappropriation 

of participants' funds by making false statements to participants. Saffron made and continues to 

make, individually and as the agent of Circle Society, numerous representations to participants as 

to why Defendants are not paying profits as promised, including but not limited to: (a) computer 

shutdowns due to "solar flares"; (b) withdrawal delays at various cryptocurrency exchanges; and 

(c) transactions being "jammed up" or "frozen in cycle." Upon information and belief, these 

representations are false. 

D. Failure to Register 

43. During the Relevant Period, Saffron acted and continues to act in a capacity as a 

CPO by soliciting, accepting, and receiving funds from the public while engaged in a business 

that is of the nature of an investment trust, syndicate, or similar form of enterprise, for the 

purpose of, among other things, trading in commodity futures, without being registered with the 

CFTC as a CPO. 

44. From September 6, 2018 through the present, Circle Society acted and continues 

to act in a capacity as a CPO by soliciting, accepting, and receiving funds from the public while 

engaged in a business that is of the nature of an investment trust, syndicate, or similar form of 

enterprise, for the purpose of, among other things, trading in commodity futures, without being 

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registered with the CFTC as a CPO. 

45. From September 6, 2018 through the present, Saffron acted and continues to act 

3 in a capacity as an AP of Circle Society by, in his capacity as a partner, officer, employee, 

4 consultant or agent of the CPO (Circle Society), soliciting or supervising the solicitation of funds 

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for participation in the Pool, without being registered with the CFTC as an AP of a CPO. 

VI. VIOLATIONS OF THE COMMODITY EXCHANGE ACT 

AND CFTC REGULATIONS 

COUNT ONE 

Violations of Section 4c(b) of the Act, 7 U .S.C. § 6c(b) (2012), and Regulation 32.4, 

17 C.F.R. § 32.4 (2019) 

(Options Fraud-Defendants Saffron and Circle Society) 

46. The allegations set forth in the preceding paragraphs are re-alleged and 

incorporated herein by reference. 

47. 7 U.S.C. § 6c(b) makes it unlawful for any person to offer to enter into, enter into, 

or confirm the execution of, any transaction involving any commodity regulated under the Act 

which is of the character of, or is commonly known to the trade as, inter alia, an "option," "bid," 

"offer," "put," or "call," contrary to any rule, regulation, or order of the CFTC prohibiting any · 

such transaction or allowing any such transaction under such terms and conditions as the CFTC 

shall prescribe. Through 7 U.S.C. § 6c(b), Congress has given the CFTC jurisdiction and 

plenary rulemaking authority over all commodity option transactions. 

48. 17 C.F.R. § 32.4, promulgated in part pursuant to 7 U.S.C. § 6c(b), provides that, 

in or in connection with an offer to enter into, the entry into, or the confirmation of the execution 

of, any commodity option transaction, it shall be unlawful for any person, directly or indirectly: 

(a) to cheat or defraud or attempt to cheat or defraud any other person; (b) to make or cause to be 

made to any other person any false report or statement thereof or cause to be entered for any 

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person any false record thereof; or (c) to deceive or attempt to deceive any other person by any 

means whatsoever. 

49. As described herein, Defendants cheated or defrauded, or attempted to cheat or 

defraud, and deceived, or attempted to deceive, other persons in connection with Defendants' 

offers to enter into commodity option contracts by, among other things: (a) failing to advise 

participants that they were misappropriating participants' funds; (b) failing to advise participants 

that they were not trading their funds as promised; ( c) failing to advise participants that they 

were not earning "profits" ofup to 300% every three weeks; (d) misrepresenting that 

participants' funds would be pooled and used to trade binary options trading, among other things, 

for the benefit of the Pool; and (e) falsely guaranteeing "profits" ofup to 300% every three 

weeks along with referral fees. 

50. The foregoing acts, omissions, and failures by Saffron occurred within the scope 

of his employment, agency, or office with Circle Society during the September 6, 2018 through 

the present timeframe. Therefore, Circle Society is liable for Saffron's violations of 7 U.S.C. 

17 § 6c(b) and 17 C.F.R. § 32.4, pursuant to Section 2(a)(l)(B) of the Act, 7 U.S.C. § 2(a)(l)(B) 

18 (2012), and Regulation 1.2, 17 C.F.R. § 1.2 (2019). 

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51. Saffron held and exercised direct and indirect control over Circle Society and 

either did not act in good faith or knowingly induced Circle Society's violations of 7 U.S.C. 

§ 6c(b) and 17 C.F.R. § 32.4 during the September 6, 2018 through the present timeframe. As a 

controlling person of Circle Society, Saffron is liable for Circle Society's violations of7 U.S.C. 

§ 6c(b) and 17 C.F.R. § 32.4 pursuant to Section 13(b) of the Act, 7 U.S.C. § 13c(b) (2012). 

52. Each misrepresentation, omission of material fact, false statement, and 

26 misappropriation, including but not limited to those specifically alleged herein, is alleged as a 

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separate and distinct violation of7 U.S.C. § 6c(b) and 17 C.F.R. § 32.4. 

COUNT TWO 

Violations of Section 4o(l)(A)-(B) of the Act, 7 U.S.C. § 6o(l)(A)-(B) (2012) 

(Fraud by a CPO-Defendants Saffron and Circle Society; Fraud by an AP of a CPODefendant Saffron) 

53. The allegations set forth in the preceding paragraphs are re-alleged and 

6 incorporated herein by reference. 

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54. During the Relevant Period, Saffron acted and continues to act as a CPO, as 

defined by Section la(l 1) of the Act, 7 U.S.C. § la(l 1) (2012), by soliciting, accepting, or 

receiving funds or property (in the form ofBitcoin) from the public while engaged in a business 

that is of the nature of an investment trust, syndicate, or similar form of enterprise, for the 

purpose of trading in commodity interests, including, in relevant part, commodity options 

authorized under Section 4c of the Act, 7 U.S.C. § 6c. 

55. From September 6, 2018 through the present, Circle Society acted and continues 

to act as a CPO, as defined by Section la(l 1) of the Act, 7 U.S.C. § la(l l) (2012), by soliciting, 

accepting, or receiving funds or property (in the form ofBitcoin) from the public while engaged 

in a business that is of the nature of an investment trust, syndicate, or similar form of enterprise, 

for the purpose of trading in commodity interests, including, in relevant part, commodity options 

authorized under 7 U.S.C. § 6c. 

56. An AP of a CPO is defined by Regulation 1.3, 17 C.F.R. § 1.3 (2019), as any 

person who is associated with a CPO as a partner, officer, employee, consultant, or agent ( or any 

natural person occupying a similar status or performing similar functions), in any capacity which 

involves (i) the solicitation of funds, securities, or property for a participation in a commodity 

pool or (ii) the supervision of any person or persons so engaged. From September 6, 2018 

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through the present, Saffron acted and continues to act as an AP of CPO Circle Society by 

soliciting funds or property (in the form ofBitcoin) for the Pool. 

57. 7 U.S.C. § 6o(l)(A)-(B) prohibits CPOs and APs of CPOs, whether registered 

with the CFTC or not, from using the mails or any means or instrumentality of interstate 

commerce, directly or indirectly, from employing devices, schemes or artifices to defraud any 

ac:tual or prospective participant, or engaging in transactions, practices, or courses of business 

which operate as a fraud or deceit upon any actual or prospective participant. 

58. As alleged herein, Defendants employed or are employing a device, scheme, or 

artifice to defraud actual and prospective participants or engaged or are engaging in transactions, 

practices, or a course of business which operated or operates as a fraud or deceit upon any actual 

or prospective participant, including without limitation: misappropriation of participants' funds 

and misrepresenting and/or omitting material facts in solicitations and communications with 

participants, all in violation of 7 U.S.C. § 6o(l)(A)-(B). 

59. The foregoing acts, omissions, and failures by Saffron occurred within the scope 

of his employment, agency, or office with Circle Society during the September 6, 2018 through 

the present timeframe. Therefore, Circle Society is liable for Saffron's violations of7 U.S.C. 

§ 6o(l)(A)-(B) pursuant to 7 U.S.C. § 2(a)(l)(B) and 17 C.F.R. § 1.2. 

60. Saffron held and exercised direct and indirect control over Circle Society and 

either did not act in good faith or knowingly induced Circle Society's violations of7 U.S.C. 

§ 6o(l){A)-(B) during the September 6, 2018 through the present timeframe. As a controlling 

person of Circle Society, Saffron is liable for Circle Society's violations of7 U.S.C. § 6o(l)(A)-

(B), pursuant to 7 U.S.C. § 13c(b ). 

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61. Each act of fraudulent solicitation, misappropriation and false statement, 

including but not limited to those specifically alleged herein, is alleged as a separate and distinct 

violation of7 U.S.C. § 6o(l)(A)-(B). 

COUNT THREE 

Violations of Regulation 4.20(a)(l), (b), and (c), 17 C.F.R. § 4.20(a)(l), (b), (c) (2019) 

(Failure to Operate Commodity Pool as a Separate Legal Entity, Failure to Receive Funds 

in the Pool's Name, and Commingling of Pool Funds) 

62. The allegations set forth in the preceding paragraphs are re-alleged and 

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63. 17 C.F.R. § 4.20(a)(l) requires a CPO to operate his or her commodity pool as an 

entity cognizable as a legal entity separate from that of the pool operator, with certain specified 

exceptions not applicable here. 

64. During the Relevant Period, Saffron, and from September 6, 2018 through the 

14 present, Circle Society, while acting as CPOs, violated 17 C.F.R. § 4.20(a)(l) by failing to 

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65. 17 C.F .R. § 4.20(b) provides: "All funds, securities or other property received by 

a commodity pool operator from an existing or prospective pool participant for the purchase of 

an interest or as an assessment (whether voluntary or involuntary) on an interest in a pool that it 

operates or that it intends to operate must be received in the pool's name." 

66. During the Relevant Period, Saffron, and from September 6, 2018 through the 

present, Circle Society, while acting as CPOs, violated 17 C.F .R. § 4.20(b) by receiving funds 

from existing or prospective pool participants for the purchase of an interest in the Pool without 

receiving the same in the Pool's name. 

67. 17 C.F .R. § 4.20( c) provides, "[ n ]o commodity pool operator may commingle the 

property of any pool that it operates or that it intends to operate with the property of any other 

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person." 

68. During the Relevant Period, Saffron, and from September 6, 2018 through the 

3 present, Circle Society, while acting as CPOs, violated 17 C.F .R. § 4.20( c) by commingling pool 

4 funds with the personal funds of Saffron. 

5 COUNTFOUR 

6 Violations of Section 4m(l) and 4k(2) of the Act, 7 U.S.C. §§ 6m(l), 6k(2)(2012) 

I (Failure to Register as a CPO-Defendants Saffron and Circle Society; Failure to Register 

7 as an AP of a CPO-Defendant Saffron) 

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69. The allegations set forth in the preceding paragraphs are re-alleged and 

incorporated herein by reference. 

70. 7 U.S.C. § 6m(l) makes it unlawful for any CPO, unless registered with the 

CFTC, to make use of the mails or any means or instrumentality of interstate commerce in 

connection with its business as a CPO. 

71. During the Relevant Period, Saffron acted as a CPO by engaging in a business 

that was in the nature of a commodity pool, investment trust, syndicate, or similar enterprise, and 

in connection therewith, solicited, accepted, or received from others, funds, securities, or 

property, either directly or otherwise, for the purpose of trading in commodity interests, 

including without limitation, commodity options, while failing to register with the CFTC as a 

CPO in violation of7 U.S.C. § 6m(l). During the Relevant Period, Saffron was not exempt from 

registration as a CPO. 

72. From September 6, 2018 through the present, Circle Society acted as a CPO by 

engaging in a business that was in the nature of a commodity pool, investment trust, syndicate, or 

similar enterprise, and in connection therewith, solicited, accepted, or received from others, 

funds, securities, or property, either directly or otherwise, for the purpose of trading in 

commodity interests, including without limitation, commodity options, while failing to register 

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with the CFTC as a CPO in violation of7 U.S.C. § 6m(l). From September 6, 2018 through the 

present, Circle Society was not exempt from registration as a CPO. 

73. 7 U.S.C. § 6k(2) makes it unlawful for any person to be associated with a CPO as 

an officer or agent ( or any person occupying a similar status or performing similar functions), in 

any capacity that involves the solicitation of funds, securities, or property for participation in a 

commodity pool, unless such person is registered with. the CFTC as an AP of a CPO. 

74. From September 6, 2018 through the present, Saffron was associated with CPO 

Circle Society as an officer or agent in a capacity that involved the solicitation of funds, 

securities, or property for participation in a commodity pool, while failing to register with the 

CFTC as an AP of the CPO Circle Society in violation of7 U.S.C. § 6k(2). From September 6, 

2018 through the present, Saffron was not exempt from the requirement to register as an AP of a 

CPO. 

75. The foregoing acts, omissions, and failures by Saffron occurred within the scope 

of his employment, agency, or office with Circle Society during the September 6, 2018 through 

the present timeframe. Therefore, Circle Society is liable for Saffron's violations of 7 U.S.C. 

§ 6k(2), pursuant to 7 U.S.C. § 2(a)(l)(B) and 17 C.F.R. § 1.2. 

76. Saffron held and exercised direct and indirect control over Circle Society and 

either did not act in good faith or knowingly induced Circle Soci_ety's violations of7 U.S.C. 

§ 6m(l) during the September 6, 2018 through the present timeframe. As a controlling person of 

Circle Society, Saffron is liable for Circle Society's violations of 7 U.S.C. § 6m(l), pursuant to 

7 U.S.C. § 13c(b). 

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77. Each instance during the Relevant Period in which Saffron acted as an 

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separate and distinct violation of7 U.S.C. § 6m(l). 

78. Each instance from September 6, 2018 through the present in which Circle 

Society acted as an unregistered CPO, including but not limited to those specifically alleged 

herein, is alleged as a separate and distinct violation of7 U.S.C. § 6m(l). 

79. Each instance from September 6, 2018 through the present in which Saffron acted 

as an AP of Circle Society, including but not limited to those specifically alleged herein, is 

alleged as a separate and distinct violation of 7 U.S.C. § 6k(2). 

VII. RELIEF REQUESTED 

WHEREFORE, the CFTC respectfully requests that this Court, as authorized by Section 

6c of the Act, 7 U.S.C. § 13a-1 (2012), and pursuant to its own equitable powers, enter: 

A. An order finding that Defendants violated Sections 4c(b), 4m(l), and 4o(l)(A)-

(B) of the Act, 7 U.S.C. §§ 6c(b), 6m(l), 6o(l)(A)-(B) (2012), and Regulations 4.20(a)(l), {b) 

and (c), and 32.4, 17 C.F.R. §§ 4.20(a)(l), (b), (c), 32.4 (2019); 

B. An order finding that Saffron violated Section 4k(2) of the Act, 7 U.S.C. § 6k(2) 

19 (2012); 

20 c. An order of permanent injunction restraining, enjoining and prohibiting 

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Defendants and any other person or entity in active concert with them, from engaging in conduct 

in violation of7 U.S.C. §§ 6c(b), 6m(l), 6o(l)(A)-(B) and 17 C.F.R. §§ 4.20(a)(l), (b), (c), 32.4; 

D. An order of permanent injunction restraining, enjoining and prohibiting Saffron 

and any other person or entity in active concert with him, from engaging in conduct in violation 

of7 U.S.C. § 6k(2) (2012); 

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E. An order of permanent injunction prohibiting Defendants and any other person or 

entity in active concert with them from, directly or indirectly: 

1) Trading on or subject to the rules of any registered entity (as that term is 

defined by Section la(40) of the Act, 7 U.S.C. § la(40) (2012)); 

2) Entering into any transactions involving "commodity interests" (as that term is 

defined in Regulation 1.3, 17 C.F.R. § 1.3 (2019)), for accounts held in the 

name of Defendants or for accounts in which Defendants have a direct or 

indirect interest; 

3) Having any commodity interests traded on Defendants' behalf; 

4) Controlling or directing the trading for, or on behalf of any other person or 

entity, whether by power of attorney or otherwise, in any account involving 

commodity interests; 

5) Soliciting, receiving, or accepting any funds from any person for the purpose 

of purchasing or selling of any commodity interests; 

6) Applying for registration or claiming exemption from registration with the 

CFTC in any capacity, and engaging in any activity requiring such registration 

or exemption from registration with the CFTC, except as provided for in 

Regulation 4.14(a)(9), 17 C.F.R. § 4.14(a)(9) (2019); and 

7) Acting as a principal (as that term is defined in Regulation 3. l(a), 17 C.F.R. 

§ 3. l(a) (2019)), agent, or any other officer or employee of any person 

registered, exempted from registration, or required to be registered with the 

CFTC except as provided for in Regulation 4.14(a)(9), 17 C.F.R. § 4.14(a)(9) 

(2019); 

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F. An order requiring Defendants, as well as any successors thereof, to disgorge, 

pursuant to such procedures as the Court may order, all benefits received including, but not 

limited to, salaries, commissions, loans, fees, revenues, and trading profits derived, directly or 

indirectly, from acts or practices which constitute violations of the Act and Regulations as 

described herein, including pre-judgment and post-judgment interest; 

G. An order requiring Defendants, as well as any successors thereof, to make full 

restitution, pursuant to such procedures as the Court may order, to every person or entity who 

sustained losses proximately caused by Defendants' violations described herein, including prejudgment and post-judgment interest; 

H. An order directing Defendants, as well as any successors thereof, to rescind, 

pursuant to such procedures as the Court may order, all contracts and agreements, whether 

implied or express, entered into between them and any of the participants whose funds were 

received by Defendants as a result of the acts and practices that constituted violations of the Act 

and Regulations, as described herein; 

I. An order directing Defendants, as well as any successors thereof; to pay a civil 

monetary penalty, to be assessed by the Court, in an amount not to exceed the penalty prescribed 

by Section 6c(d)(l) of the Act, 7 U.S.C. § 13a-l(d)(l) (2012), as adjusted for inflation pursuant 

to the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015, Pub. L. 114-

74, tit. VII,§ 701, 129 Stat. 584, 599-600, see 17 C.F.R. § 143.8 (2019), or subsequent annually 

adjusted amounts, for each violation of the Act and Regulations, as described herein; 

J. An order directing that Defendants, and any successors thereof, make an 

25 accounting to the Court of all of their assets and liabilities, together with all funds they received 

26 from and paid to participants and other persons in connection with commodity interests and all 

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disbursements for any purpose whatsoever of funds received from commodity interests, 

including salaries, commissions, interest, fees, loans, and other disbursement of money or 

property of any kind from at least December 2017 to the date of such accounting; 

K. An order requiring Defendants, and any successors thereof, to pay costs and fees 

as permitted by 28 U.S.C. §§ 1920 and 2413(a)(2) (2012); and 

L. Such other and further relief as this Court may deem necessary and appropriate 

under the circumstances. 

Dated: September 30, 2019 Respectfully submitted, 

By: Isl Danielle E. Karst 

Danielle E. Karst 

Timothy J. Mulreany 

COMMODITY FuTURES TRADING 

COMMISSION 

Three Lafayette Centre 

1155 21st Street, N.W. 

Washington, D.C. 20581 

Telephone: (202) 418-5000 

Facsimile: (202) 418-5523 

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