Coinspeaker
US SEC Charges CryptoFX for Perpetrating $300M Crypto Ponzi Scheme Targeting Latino Investors
The United States Securities and Exchange Commission (SEC) charged seventeen individuals involved in a major Ponzi scheme through CryptoFX LLC earlier this week. According to the SEC’s charges, more than 40,000 investors, who are mostly individuals from the Latino community and two other countries, were defrauded around $300 million over a span of two years.
“We allege that CryptoFX was a $300 million Ponzi scheme that targeted Latino investors with promises of financial freedom and life-altering wealth from risk-free and guaranteed crypto and foreign exchange investments,” Gurbir S. Grewal, Director of the SEC’s Division of Enforcement, noted.
US SEC’s Past Charges against CryptoFX
The SEC stated that CryptoFX had several employees who managed to convince and defraud investors from 10 different states including two foreign countries. Interestingly, the Ponzi scheme perpetrators had been issued with an injunction for offering unregistered crypto assets in mid-September 2022. During the 2022 charges, the US SEC noted that CryptoFX raised over $22 million from over 5,000 investors mostly targeting the Latino community.
While the court granted the SEC’s motion to freeze CryptoFX assets, the perpetrators ostensibly continued to solicit funds from investors. Additionally, Gabriel Ochoa, one of the named defendants, instructed two CryptoFX investors to rescind their complaints to the SEC to facilitate the recovery of their investments. Another defendant, Maria Saravia, allegedly told CryptoFX investors that the ongoing US SEC lawsuit was fake.
“After filing the initial charges in this case and obtaining emergency relief, we continued our investigation to identify additional individuals who allegedly played roles in this massive Ponzi scheme. Our efforts bore significant fruit as the charges and allegations today demonstrate,” Eric Werner, Director of the SEC’s Fort Worth Regional Office, noted.
The SEC mentioned that the defendants used the investors’ funds to pay early investors, a perfect definition of a Ponzi scheme. In addition, the perpetrators ostensibly used the rest of the funds to pay themselves instead of trading as highlighted to investors.
Market Picture
The US SEC has been clearing the way for mainstream adoption of digital assets through regulated ways in the past few years. Although the US SEC led by Chair Gary Gensler has lost some crypto-related cases, market confidence has significantly improved in the recent past. Moreover, billions of dollars have proliferated the cryptocurrency market through the recently approved spot Bitcoin exchange-traded funds (ETFs).
Nonetheless, the complexity of the Web3 ecosystem through multi-chain smart contracts makes it possible for fraudsters to prey on unsuspecting investors. In the meantime, cryptocurrency investors will have to follow reputable and regulated web3 channels to avoid falling victim.
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US SEC Charges CryptoFX for Perpetrating $300M Crypto Ponzi Scheme Targeting Latino Investors