SEC charges 17 in CryptoFX’s $300 million Ponzi scheme

abdelaziz Fathi

The U.S. Securities and Exchange Commission (SEC) has charged 17 individuals involved in an alleged Ponzi scheme that amassed $300 million by deceiving over 40,000 investors, mostly within the Latino community.

CryptoFX

According to the SEC, the defendants operated in 10 U.S. states and two other countries, misleading investors into believing their funds would be invested in cryptocurrencies and other assets. However, the agency alleges that the funds were not invested as promised.

Two of the defendants have settled with the SEC, while the others face charges for their roles in the scheme.

In a statement, SEC stated that CryptoFX, the company behind the scheme, offered false promises of financial freedom and guaranteed returns. Instead, the scheme left a trail of victims across multiple jurisdictions.

The SEC’s complaint details how salespeople solicited investors, promising massive returns ranging from 15% to 100% through CryptoFX’s crypto and foreign exchange trading activities. Despite promises of 15% to 100% returns on investments, the SEC’s findings revealed that the majority of the $300 million raised was not allocated to trading. Indeed, the majority of the funds raised were allegedly used to pay commissions, bonuses, and fund the defendants’ lifestyles, rather than for legitimate trading purposes.

One defendant allegedly used investor funds to purchase a $1 million house in Texas, highlighting the misuse of investor funds.

“The only thing that CryptoFX guaranteed was a trail of thousands upon thousands of victims stretching across 10 states and two foreign countries. A scheme of that size requires lots of participants, and as today’s action demonstrates, we will pursue charges against not just the principal architects of these massive schemes, but all those who further their fraud by unlawfully soliciting victims,” stated Gurbir Grewal, the SEC Enforcement Director.

The SEC’s legal action expands upon a previous emergency action filed against the scheme’s main principals, Mauricio Chavez and Giorgio Benvenuto, in late 2022. Despite court orders to halt the scheme, two defendants, Gabriel and Dulce Ochoa, continued to solicit investors, with Gabriel Ochoa even attempting to pressure investors to retract their complaints to the SEC.

In the wake of these allegations, two of the 17 defendants have reached settlements with the SEC, neither admitting nor denying the charges against them.

 

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