Financial Crime Weekly: Man Charged With Operating $198 Million Crypto Ponzi Scheme

The Securities and Exchange Commission filed charges on Tuesday against Ramil Palafox, accusing him of running a fraudulent investment scheme that collected nearly $198 million from Bitcoin BTC/USD and foreign exchange investors and misappropriated more than $57 million for his personal benefit.

The Details: According to the SEC’s complaint, Palafox operated through his company, PGI Global, which he promoted as a cryptocurrency and foreign exchange trading business. Between January 2020 and October 2021, Palafox offered “membership” packages to investors that promised guaranteed high returns from PGI Global’s alleged trading activities.

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The SEC alleges that Palafox diverted over $57 million to finance an extravagant lifestyle, including the purchase of luxury cars, expensive watches and high-end goods. The complaint further states that most of the remaining investor money was used to pay returns and referral bonuses to earlier investors, operating in a Ponzi-like fashion until the scheme collapsed in late 2021.

“Palafox used the guise of innovation to lure investors into lining his pockets with millions of dollars while leaving many victims empty-handed,” said Laura D’Allaird, Chief of the Commission’s Cyber and Emerging Technologies Unit. 

“In reality, his false claims of crypto industry expertise and a supposed AI-powered auto-trading platform were just masking an international securities fraud,” D’Allaird added. 

The SEC’s complaint, filed in the U.S. District Court for the Eastern District of Virginia, charges Palafox with violating federal securities laws’ anti-fraud and registration requirements. The SEC is seeking permanent injunctions, a ban on Palafox’s involvement in similar investment programs, the return of ill-gotten gains with interest and civil penalties.

In a related criminal case, Palafox has been arraigned on charges brought by the U.S. Attorney’s Office for the Eastern District of Virginia.

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