A purported cryptocurrency and foreign exchange investment firm is in hot water with the U.S. Commodity Futures Trading Commission (CFTC) and stands accused of operating like a Ponzi scheme.

In a press release on Wednesday, relating to a complaint filed Sept. 30., the CFTC said it's charging Nevada-based Circle Society and its operator David Gilbert Saffron with fraudulently soliciting and misappropriating investor funds, as well as registration violations.

Through his firm, Saffron offered binary options on forex and cryptocurrency pairs and is alleged to have fleeced investors for $11 million in dollars and bitcoin since 2017.

The complaint says Saffron fraudulently solicited funds from at least 14 individuals to participate in an investment pool operated by Circle Society, making false claims about his trading expertise and "guaranteeing" gains of up to 300 percent.

Instead of using participants’ investments to actually trade in binary options contracts, Saffron used the funds – diverted to his own crypto wallet – to pay other participants, "in the manner of a Ponzi scheme." The misappropriation of the funds was concealed with a tissue of lies, allegedly.

CFTC Chairman Heath Tarbert said:

A court has ordered the freezing of any assets held by Saffron and Circle Society, as well as the preservation of financial records. A hearing over the case will take place Oct. 29.

The CFTC is seeking to retrieve the funds contributed to the scheme, alongside penalties and permanent registration and trading bans. The agency hopes to return invested funds to victims, though it said it cannot guarantee the full value can be obtained from Saffron and his firm.

CFTC image via Shutterstock