U.S. Commodity Futures Trading Commission (CFTC) files lawsuit against Mosaic Exchange Limited and Sean Michael。

According to an indictment filed by the CFTC in the Southern District Court of Florida on September 26, 2023, from about February 2019 to about June 2021 (the "Relevant Period"), Mosaic Exchange, through its officers, agents and employees and Sean Michael, directly and fraudulently solicited and induced individuals in the United States and other countries to open accounts with and transfer Bitcoin ("BTC") or other funds to Defendants for the purpose of leveraging futures on behalf of Mos。

In order to induce customers and potential customers to open accounts with Mosaic, while working as a Commodity Pool Operator (CPO), Michael, while working as a CPO Affiliate (AP), misrepresented and advertised Mosaic as:

a.is a cryptocurrency trading platform that manages tens of millions of dollars in assets;

b.Provide a proprietary trading algorithm designed by Mosaic. According to Mosaic, the algorithm is used to trade "futures," "spot" and "leveraged" digital asset commodity contracts. The accuracy rate is as high as 82%, and the profit margin is said to vary from "20% -60% per month" and "10% -50% per month" in different periods; c.Have partnerships or brokerage agreements with certain cryptocurrency trading exchanges。

In fact, contrary to the defendant's statements, Mosaic is not a trading platform that manages tens of millions of dollars in assets, Mosaic does not have the stated record of making profits from trading, on the contrary, it also loses money when trading for clients, and Mosaic does not have a partnership or brokerage agreement with the cryptocurrency exchanges advertised by the defendant.。

In addition, the defendant misappropriated some of the client's funds to cover Michael's restaurant and travel expenses.。

As a result of Defendant's fraud scheme, at least 17 people based in the United States (including Florida) and other countries provided hundreds of thousands of dollars worth of BTC or other funds to Defendant for Defendant to engage in transactions related to BTC and other digital asset commodities on behalf of clients through Mosaic.。Defendants traded futures contracts or swaps for a number of clients and engaged in spot and leveraged or margin retail commodity trading for BTC and other digital asset commodities, with many clients losing most or all of their funds.。

The CFTC alleges that this behavior of the defendant violated Section 4b (a) (2) (A) and (C), 4o (1) (A) and (B), 6 (c) (1) of the Act, namely 7 U.S.C.§ § 6b.S.C.§ 6b (a) (2) (A) and (C), 6o (1) (A) and (B), 9 (1), and Commission Ordinance (the "Ordinance") 4.41 and 180.1 (a), 17 C.F.R.§ § 4.41, 180.1 (a) (2022)。

At all relevant times, the acts of Michael and other Mosaic agents and employees were committed to the extent that they were employed, represented or employed by Mosaic。Accordingly, pursuant to Section 2 (a) (1) (B) of the Act (7 U.S.C. § 2 (a) (1) (B)) and Regulation 1.2 (17 CFR 1.2 (2022)), Mosaic, as a principal, is liable for their violations of the U.S. Economic Code and regulations。

In addition, at all relevant times, Michael was a controller of Mosaic and knowingly induced related violations of the U.S. Securities Exchange Act and Regulations, or failed to act in good faith。Accordingly, under section 13c (b) of title 7, United States Code, Michael, as controller, is liable for Mosaic's violations of the United States Economic Competition Act and the Regulations。

The United States Commodity Futures Trading Commission (CFTC) considers that, unless permanently restricted and prohibited by this court, it is possible for the defendant to continue to engage in the acts and practices alleged in this indictment, or similar acts and practices.。

Accordingly, pursuant to sections 2 (c) (2) (d) and 6c of the Act (7 U.S.C.§ 2 (c) (2) (D) and 13a-1), the Commission brought suit to prohibit the defendant's illegal acts and practices, compel them to comply with the Act and regulations, and further prohibit the defendant from engaging in any commodity interest or digital asset commodity-related activities.。

In addition, the Commission seeks civil fines, restitution, forfeiture of the defendant's unlawful gains, and ancillary remedies, including, but not limited to, a permanent prohibition of the transaction and registration, revocation, fees and costs, pre- and post-judgment interest, and such equitable relief as the Court deems necessary or appropriate.。