On 13 January 2025, the United States Commodity Futures Trading Commission (US CFTC) announced that Mosaic Exchange Ltd. and its CEO, Sean Michael, have been ordered by the US District Court for the Southern District of Florida (case 9:23-cv-8130-AMC) to pay over $1.1 million in penalties and restitution. This judgment follows findings of fraudulent digital asset solicitation and trading activities conducted between February 2019 and June 2021.
US CFTC filed a complaint on 26 September 2023, alleging that Mosaic and Michael fraudulently solicited 18 individuals to trade Bitcoin and other digital asset commodities, misrepresented their assets under management, fabricated trading success rates, and misappropriated customer funds. These violations contravened the US Commodity Exchange Act (CEA) and US CFTC regulations. The defendants, who failed to respond adequately to legal proceedings, were found liable by default judgment orders entered on 23 December 2024 and 30 December 2024.
The court ordered restitution of $468,600 to affected customers, disgorgement of $60,980 in ill-gotten gains, and a $660,000 civil monetary penalty. Mosaic and Michael are also permanently barred from registering with the US CFTC and trading in US CFTC-regulated markets. Additionally, they are prohibited from engaging in any commodity-related activities or making misleading statements about their operations.
The US CFTC uncovered that Mosaic falsely claimed tens of millions of dollars in assets under management, fabricated monthly profit rates, and advertised fictitious partnerships with cryptocurrency exchanges such as Binance and BitMEX. In reality, Mosaic managed less than $700,000 and generated consistent trading losses. Sean Michael used customer funds for personal expenses, including travel and dining, while failing to return any funds to investors.
The investigation, supported by extensive documentation and financial records, revealed that the fraudulent activities targeted individuals in the United States and abroad. Mosaic and Michael’s failure to comply with procedural requirements in the case, including multiple court orders, led to the default judgment.
The US CFTC filed its initial complaint on 26 September 2023. After numerous failed attempts to serve the defendants, the court granted a Final Default Judgment on 23 December 2024, followed by an additional order on 30 December 2024.
(Source: https://www.cftc.gov/PressRoom/PressReleases/9032-25, https://www.cftc.gov/media/11726/enfmosaicexchangeltdfinaldefaultjudgement123024/download, https://www.cftc.gov/media/11731/enfmosaicexchangeltdordergrantingfinaldefaultjudgement122324/download)
