Source: Cointelegraph Original: "{title}"
The U.S. Securities and Exchange Commission (SEC) and federal prosecutors have charged a man with orchestrating a cryptocurrency fraud scheme, allegedly defrauding 90,000 investors out of a total of $200 million by enticing them with profits from Bitcoin (BTC) and forex trading.
On April 22, the SEC announced that it has filed a lawsuit against Ramil Palafox, who holds dual citizenship in the U.S. and the Philippines. The SEC claims that from January 2020 to October 2021, Palafox misappropriated over $57 million of investor funds through his company PGI Global.
Regulators accuse Palafox of executing a "Ponzi scheme-like" fraud using a multi-level marketing model until the company collapsed in 2021. The SEC stated that he lured investors with "false claims of expertise in the cryptocurrency industry and a so-called AI-driven automated trading platform."
The SEC noted that Palafox hosted lavish events in Dubai and Las Vegas to recruit new members, offering them referral bonuses for bringing in more people. He also used investor funds to pay other investors to further promote the scheme while lining his own pockets.
Scott Thompson, deputy director of the SEC's Philadelphia office, stated, "Palafox attracted investors with promises of guaranteed returns from complex crypto assets and forex trading, but he never traded; instead, he used millions of dollars of investor funds to buy cars, luxury watches, and real estate for himself and his family."
The SEC has charged Palafox with violating anti-fraud and registration provisions of federal securities laws and is seeking a permanent injunction to prohibit him from future sales of securities and crypto assets, while also demanding the return of ill-gotten gains and civil penalties.
The SEC's lawsuit coincides with actions from the U.S. Attorney's Office for the Eastern District of Virginia, which has filed criminal charges against Ramil Palafox.
According to an indictment submitted under seal on March 13, federal prosecutors have charged Palafox with wire fraud, money laundering, and illegal currency trading.
Prosecutors allege that Palafox misled investors with false promises of daily returns from Bitcoin trading ranging from 0.5% to 3%, while concealing information about PGI's profitability, licenses, and business activities.
The indictment states that Palafox told investors that the company generated substantial returns through cryptocurrency exchanges, claiming that "regardless of whether Bitcoin prices rise or fall, his traders can make money."
However, the Department of Justice pointed out that, in reality, most investors' funds were never used to purchase or trade Bitcoin, and many lost part or all of their investments.
The indictment lists properties that would be subject to forfeiture if Palafox is convicted, including over $1 million in cash, 17 vehicles (including 2 Teslas, 1 Ferrari 458 Special, 2 Lamborghinis, and 2 Porsches), as well as various luxury handbags, wallets, shoes, jewelry, and watches.
The scheme involved several affiliated companies, including Praetorian Group International Trading Inc., whose website was shut down by the Department of Justice in 2021, leading to its business in the UK being closed by the High Court.
This is the first cryptocurrency-related case handled by the SEC under newly sworn-in Chairman Paul Atkins on April 22.
In January, the SEC filed a lawsuit against Nova Labs, accusing it of offering unregistered securities through the sale of devices used to mine Helium (HNT) tokens. The SEC reached a settlement with Nova Labs in April, resulting in the lawsuit being dismissed and a civil penalty of $200,000 imposed.
Related: The High Court of Australia supports Block Earner, dismissing the lawsuit from financial regulators.
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