Federal authorities and regulators have accused an individual they assert orchestrated a vast cryptocurrency fraud operation that defrauded $200 million from 90,000 backers.
Ramil Palafox, a dual citizen of the US and the Philippines, supposedly embezzled more than $57 million from January 2020 through October 2021 via his enterprise PGI Global, as per the charges submitted on April 22.
Mechanism of The Scheme
The Securities and Exchange Commission claims Palafox attracted investors by making deceitful claims regarding his understanding of cryptocurrency and a trading platform driven by AI.
Expenditure On Luxury Items
“Palafox enticed investors with the assurance of guaranteed profits through advanced trading of digital assets and forex, but instead of trading, Palafox splurged on vehicles, timepieces, and residences for himself and his family using millions of dollars of investor funds,” stated Scott Thompson, associate director of the SEC’s Philadelphia office.
Court documents reveal that if found guilty, Palafox would forfeit over $1 million in liquid assets along with an impressive collection of 17 cars, which includes two Teslas, a Ferrari 458 Special, two Lamborghinis, and two Porsches.
A screenshot of the SEC complaint against Ramil Palafox. Source: SEC
Officials revealed Palafox hosted extravagant recruitment events in Dubai and Las Vegas, where he provided bonuses to participants for bringing in new investors.
The investigators also detailed various designer handbags, wallets, footwear, jewelry, and watches as assets connected to the alleged fraud.
The money from new investors was not utilized for trading as promised but was redirected to pay off earlier investors and support Palafox’s lavish lifestyle.
BTCUSD trading around the $93,417 mark on the 24-hour chart: TradingView.com
Unrealistic Promises Of High Returns
Federal officials indicted Palafox on charges of wire fraud, money laundering, and unauthorized financial transactions in an indictment presented on March 13. They assert he misled investors by assuring daily returns from 0.5% to 3% on Bitcoin trades.
Palafox purportedly informed investors that his traders could generate profits regardless of whether the price of Bitcoin was increasing or decreasing. According to investigations from the Justice Department, most investors’ money was never allocated for buying or selling Bitcoin, resulting in many individuals losing part or all of their investments.
First Major Case Under New SEC Leadership
This case marks the initial cryptocurrency-related enforcement action since Paul Atkins assumed the role of SEC chairman on April 22.
Atkins has been described as “crypto-friendly” in his approach to regulation. The SEC is pursuing various sanctions against Palafox, including a permanent ban on selling securities and crypto assets, recovery of illicit profits, and civil penalties.
This initiative follows another recent enforcement action against Nova Labs, which concluded in April with a settlement and a $200,000 civil penalty due to allegations of selling unregistered securities utilizing Helium token mining equipment.
Featured image from Outseer, chart from TradingView
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