SEC Busts 17 People for Allegedly Running $300M Ponzi Scheme
The SEC said they charged the individuals for their roles in a scheme involving CryptoFX
March 15, 2024 08:00 AM
Reading time: 1 minute, 27 seconds
TL;DR The SEC's complaint alleges that, from May 2020 to October 2022, the 17 charged individuals from Texas, California, Louisiana, Illinois, and Florida acted as leaders of the CryptoFX network and solicited investors by variously promising that CryptoFX's crypto assets and foreign exchange trading would generate returns.
The United States Securities and Exchange Commission (SEC) reported last night that it charged 17 people behind a $300 million Ponzi scheme via the crypto trading platform CryptoFX.
CryptoFX is registered as a crypto trading platform in Houston. In September 2022, the SEC filed an emergency action to halt all CryptoFX operations. The commission suspected it was a crypto Ponzi scheme. Eighteen months later, the SEC identified and charged 17 individuals involved in the scheme.
“We allege that CryptoFX was a $300 million Ponzi scheme that targeted Latino investors with promises of financial freedom and life-altering wealth from ‘risk free’ and ‘guaranteed’ crypto and foreign exchange instruments,” said Gurbir S. Grewal, director of the SEC’s Division of Enforcement.
The allegedly fraudulent trading platform targeted predominantly Latino crypto investors from across 10 U.S. states and two foreign countries.
The SEC found CryptoFX employees misappropriated investors’ funds by falsely promising investments into potentially lucrative cryptocurrencies and NFTs.
The SEC requested that the court charge the individuals for violating various sections of the Securities and Exchange Act.
The SEC is also requesting that the individuals return the funds and additionally pay civil penalties for the violations.
The commission's complaint also alleges the individuals raised $300 million but did not use most of the funds for trading. Instead, it addas, they used it to pay “supposed returns” to other investments and to pay commissions and bonuses to themselves.
The SEC also alleged that following court issued orders to end the scheme in September 2022, two defendants continued to solicit investments.
The SEC complaint was filed Thursday. It accuses six defendants with violating antifraud, securities-registration and broker-registration provisions of federal securities laws. Eleven more defendants are accused of violating securities-registration and broker-registration provisions. One more was charged with violating whistleblower protection provisions.
