US Securities and Exchange Commission charges man who allegedly created crypto scheme that swindled 90,000 people out of $200M

The US Securities and Exchange Commission and federal prosecutors have charged a man they allege created a crypto scheme that swindled 90,000 people out of $200 million

The US Securities and Exchange Commission has charged a man with executing a crypto scheme that defrauded 90,000 people out of $200 million.

According to the SEC, Ramil Palafox, a dual citizen of the US and the Philippines, is accused of misusing over $57 million of investor funds that were collected through his company, PGI Global, over a period of 18 months.

The regulator claims that Palafox applied a multilevel marketing model to carry out a “Ponzi-like” scam until the company’s collapse in 2021.

It is alleged that Palafox enticed investors with “false claims of crypto industry expertise and a supposed AI-powered auto-trading platform.”

Moreover, the SEC alleges that Palafox organized lavish events in Dubai and Las Vegas to recruit new members, who were offered referral bonuses to bring in others. These funds were used to pay other investors to further promote the scheme and for Palafox’s personal expenses.

“Palafox attracted investors with the allure of guaranteed profits from sophisticated crypto asset and foreign exchange trading, but instead of trading, Palafox bought himself and his family cars, watches, and homes using millions of dollars of investor funds,” said Scott Thompson, associate director of the SEC’s Philadelphia office.

The SEC is charging Palafox with violating the anti-fraud and registration provisions of the federal securities laws. The regulator is seeking a permanent injunction to ban him from future sales of securities and crypto assets, restitution of the illegally obtained gains, and civil penalties.

Justice Department files twin action

The SEC’s complaint follows action brought by the US Attorney’s Office for the Eastern District of Virginia, which arraigned Ramil Palafox on criminal charges.

According to an indictment filed on March 13, federal prosecutors charged Palafox with wire fraud, money laundering, and unlawful monetary transactions.

Prosecutors allege that Palafox deceived investors with false promises of daily returns ranging from 0.5% to 3% from Bitcoin trading and concealed information about PGI’s profitability, licenses, and business activity.

The indictment states that Palafox informed investors that substantial returns were being generated through the company’s crypto exchanges and that “his traders were able to make money regardless of whether the price of Bitcoin was going up or down.”

However, the Justice Department alleges that, in reality, most investors’ money was not used to buy or trade Bitcoin, and many lost a portion or the entirety of their funds.

Among the property listed in the indictment that would be forfeited by Palafox if convicted is over $1 million in cash, 17 vehicles — including two Teslas, a Ferrari 458 Special, two Lamborghinis, and two Porsches — plus a variety of designer bags, wallets, shoes, jewelry, and watches.

The indictment also mentions various linked companies involved in the scheme, such as the Praetorian Group International Trading Inc., whose website was seized by the Department of Justice in 2021, leading to the closure of its UK-based operations by the British High Court.

This is the SEC chair's first case related to crypto. It comes after Paul Atkins, who is known for his pro-crypto stance, was sworn in for the role on April 22.

Earlier this year, the SEC brought a case against Nova Labs for allegedly selling unregistered securities by offering devices that mined the Helium (HNT) token. In April, the SEC reached a settlement with Nova Labs, resulting in the dismissal of the lawsuit and a $200,000 civil penalty.