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Commodity Futures Trading Commission v. Saffron

United States District Court, D. Nevada

December 6, 2019

Commodity Futures Trading Commission, Plaintiff
v.
David Gilbert Saffron a/k/a David Gilbert and Circle Society, Corp., Defendants

          ORDER GRANTING THE COMMISSION'S MOTION FOR A PRELIMINARY INJUNCTION AND OTHER EQUITABLE RELIEF [ECF NO. 6]

          JENNIFER A. DORSEY JUDGE

         Plaintiff Commodity Futures Trading Commission (“Commission” or “CFTC”) filed a Complaint for Injunctive Relief, Restitution, Disgorgement, and Civil Monetary Penalties against David Gilbert Saffron a/k/a David Gilbert (“Saffron”) and his business entity, Circle Society, Corp. (“Circle Society”) for violations of the Commodity Exchange Act, 7 U.S.C. §§ 1-2f (2012), and Commission Regulations (“Regulations”) promulgated thereunder, 17 C.F.R. pts. 1- 190 (2019).

         The Commission has moved under Section 6(c) of the Act, 7 U.S.C. § 13a-1 (2012), for injunctive and other equitable relief against Saffron and Circle Society. After a hearing on the merits and having considered the pleadings, declarations, exhibits, and memoranda filed by the parties, I find that:

1. The court has jurisdiction over the parties and over the subject-matter of this action under Section 6c of the Act, 7 U.S.C. § 13a-1 (2012).
2. Venue properly lies in this District under Section 6c(e) of the Act, 27 7 U.S.C. § 13a-l(e) (2012).
3. Saffron and Circle Society have been served with summonses, the Complaint, and all related filings, including the Commission's Emergency Ex Parte Motion for a Statutory Restraining Order and Memorandum in Support, and the Commission's Motion for a Preliminary Injunction and Memorandum in Support. No. defendant has opposed any motion.
4. There is good cause to believe that Saffron and Circle Society have engaged in, are engaging in, or are about to engage in violations of 7 U.S.C. §§ 6c(b), 6k(2), 6m(1), 6o(1)(A), (B) (2012), and 17 C.F.R. §§ 4.20(a)(1), (b), (c) and 32.4 (2019).
5. The Commission has presented evidence showing that, from at least December 2017 through the present (the “Relevant Period”), Saffron has fraudulently solicited and accepted at least $11 million worth of Bitcoin (“BTC”) and United States Dollars (“USD”) (BTC, together with USD, “funds”) from no fewer than 14 members of the public for the purported purpose of trading off-exchange binary option contracts on foreign currency (“forex”) and cryptocurrency pairs, among other things, on behalf of a commodity pool (“Pool”). The Commission has presented evidence showing that, from September 6, 2018, Saffron, individually and as principal and agent of Circle Society, has fraudulently solicited members of the public to participate in a commodity pool operated by Circle Society. The Commission has also presented evidence that those 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 as promised. The Commission has presented evidence showing that Saffron and Circle Society further violated the Act by failing to register with the Commission.
6. The Commission has shown that there is a reasonable likelihood that Saffron and Circle Society will continue to violate the Act and Regulations, as alleged in the Complaint, unless they are restrained and enjoined from further violations.
7. There is good cause to believe that immediate and irreparable harm to the court's ability to grant effective final relief in the form of monetary redress, and to the Commission and the class of persons that it seeks to protect, will occur from the sale, transfer, assignment, or other disposition of the defendants' assets and records unless they are immediately restrained and enjoined from doing so by court order.
8. There is good cause to enter an order freezing assets owned, controlled, managed, or held by, on behalf of, or for the benefit of the defendants.
9. There is good cause to enter an order prohibiting Saffron and Circle Society, their agents, servants, employees, assigns, attorneys, and persons in active concert or participation with the defendants, including any successor thereof, who receive actual notice of this Order by personal service or otherwise, from destroying records or denying the Commission's agents immediate and complete access to defendants' records for inspection and copying.
10. There is good cause to believe that, absent entry of this preliminary injunction, the defendants are likely to dissipate or transfer assets and destroy books and records.

         Relief ...


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