The US Securities and Exchange Commission (SEC) has taken significant action against Ramil Palafox, the founder of the cryptocurrency company PGI Global. Palafox has been charged with orchestrating a staggering $198 million Ponzi scheme that misled investors across the globe.
According to the SEC, Palafox deceived investors by presenting PGI Global as a legitimate enterprise engaged in cryptocurrency and foreign exchange trading between January 2020 and October 2021.
$198M Ponzi Scheme Exposed
The SEC’s complaint details how Palafox marketed “membership” packages that promised extraordinary returns purportedly generated by PGI Global’s trading activities. He further incentivized new investors through a multi-level marketing scheme designed to enhance participation.
However, the reality was far different. Palafox allegedly misappropriated more than $57 million of the investor funds for personal expenses, splurging on luxury items including high-end cars like Lamborghinis. The bulk of the remaining funds was used to pay returns to earlier investors—a defining trait of a classic Ponzi scheme—until the operation collapsed in late 2021.
Scott Thompson, Associate Director of the SEC’s Philadelphia Regional Office, remarked,
“As alleged in our complaint, 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.”
Furthermore, Laura D’Allaird, Chief of the SEC’s Cyber and Emerging Technologies Unit, characterized Palafox’s actions as a misuse of the crypto industry’s innovative appeal to perpetrate extensive securities fraud.
The SEC’s complaint, filed in the US District Court for the Eastern District of Virginia, charged Palafox with violations of federal anti-fraud and registration provisions. The agency is seeking to bar him from participating in multi-level marketing programs, recover ill-gotten gains, and impose civil penalties.
The complaint also identifies several relief defendants, including BBMR Threshold LLC and other individuals linked to Palafox, pursuing disgorgement of their improperly obtained funds. Palafox is additionally confronting criminal charges, paralleling a case initiated by the US Attorney’s Office for the Eastern District of Virginia.
Crackdown in the UK
In a related development, the UK High Court shut down PGI Global’s division in the UK in 2022 for allegedly operating a fraudulent scheme promising investors returns of up to 200%. The company claimed to deliver profitable digital asset investments while ultimately failing to fulfill its promises.
Investigators found that PGI Global had embezzled over $700,000 from its users, with executives reportedly diverting $225,000 into personal accounts and spending approximately $11,500 on luxury purchases. Throughout this process, Palafox allegedly refused to cooperate with the investigation.
The developments surrounding Palafox and PGI Global serve as a stark reminder of the vulnerabilities present in the rapidly evolving cryptocurrency landscape. Investors are urged to exercise caution and conduct thorough due diligence before committing funds to any investment opportunity.
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