Mosaic Face CFTC Charges in Connection with ‘Digital Asset Commodity Scheme’

Vignesh Karunanidhi
Mosaic Face CFTC Charges in Connection with 'Digital Asset Commodity Scheme'
Source: The Wall Street Journal

The Commodity Futures Trading Commission (CFTC) filed fraud charges against cryptocurrency trading platform Mosaic Exchange and its founder. CFTC is alleging they misled customers about profitable algorithms, assets under management, and exchange partnerships. The regulator says the scheme resulted in at least 17 victims losing hundreds of thousands in bitcoin deposits.

Also read: SEC Charges Ex-Goldman Sachs Employee With Insider Trading

In a complaint Thursday, the CFTC accused Mosaic Exchange Limited and founder Sean Michael of falsely advertising the platform’s capabilities and track record between 2019 and 2021. The agency says Mosaic falsely claimed tens of millions in assets under management and monthly returns of up to 60% using proprietary algorithms.

CFTC alleges Mosaic promoted a nonexistent partnership

Additionally, the CFTC alleges Mosaic promoted nonexistent partnerships with leading exchanges Binance and BitMEX to appear credible to prospective clients. In reality, no formal agreements existed with either trading platform.

Regulators say Michael misappropriated some customer deposits for personal expenses instead of trading as promised. The complaint says he used the funds for restaurant meals, travel, and other unauthorized purposes.

In total, the platform and inflated credentials duped at least 17 victims into handing over Bitcoin, now valued at hundreds of thousands of dollars, according to authorities. The CFTC says the defendants violated commodities trading laws through their widespread fraudulent misrepresentations.

The enforcement action demonstrates regulators’ increasing scrutiny of crypto trading platforms for misleading marketing, mishandling of customer funds, and overstating capabilities. As digital asset adoption expands, officials warn that unscrupulous actors undermine consumer trust and protections.