According to Cointelegraph, the U.S. Securities and Exchange Commission (SEC) and federal prosecutors have charged Ramil Palafox, a dual citizen of the United States and the Philippines, with orchestrating a crypto scheme that defrauded 90,000 individuals out of $200 million. The SEC announced on April 22 that Palafox allegedly misappropriated over $57 million in investor funds through his company, PGI Global, between January 2020 and October 2021. The regulator accused Palafox of employing a multilevel marketing model to execute a "Ponzi-like" scam until the company's collapse in 2021. He reportedly attracted investors with false claims of expertise in the crypto industry and a purported AI-powered auto-trading platform.
The SEC further alleged that Palafox hosted extravagant events in Dubai and Las Vegas to recruit new members, offering referral bonuses to entice others to join. Investor funds were used to pay existing investors and promote the scheme, as well as for Palafox's personal gain. Scott Thompson, associate director of the SEC's Philadelphia office, stated that Palafox lured investors with promises of guaranteed profits from sophisticated crypto asset and foreign exchange trading. Instead of trading, Palafox allegedly purchased cars, watches, and homes for himself and his family using millions of dollars from investor funds. The SEC is charging Palafox with violating anti-fraud and registration provisions of federal securities laws, seeking a permanent injunction to prevent him from future sales of securities and crypto assets, repayment of ill-gotten gains, and civil penalties.
The SEC's complaint coincides with action from the U.S. Attorney's Office for the Eastern District of Virginia, which has arraigned Palafox on criminal charges. An indictment filed under seal on March 13 accuses Palafox of wire fraud, money laundering, and unlawful monetary transactions. Prosecutors claim Palafox misled investors with false promises of daily returns ranging from 0.5% to 3% from Bitcoin trading, concealing information about PGI's profitability, licenses, and business activities. The indictment alleges that Palafox assured investors that substantial returns were generated through the company's crypto exchanges, claiming his traders could profit regardless of Bitcoin's price fluctuations. However, the Justice Department asserts that most investors' money was never used to buy or trade Bitcoin, resulting in significant losses for many.
If convicted, Palafox faces forfeiture of over $1 million in cash, 17 vehicles including luxury cars such as Teslas, a Ferrari 458 Special, Lamborghinis, and Porsches, along with designer bags, wallets, shoes, jewelry, and watches. The scheme involved various linked companies, including Praetorian Group International Trading Inc., whose website was seized by the Department of Justice in 2021, leading to the shutdown of its UK-based operations by the UK's High Court. This marks the SEC's first crypto-related case under its crypto-friendly chair, Paul Atkins, who was sworn in on April 22. Previously, the SEC brought a case against Nova Labs in January, accusing it of selling unregistered securities by offering devices that mined the Helium (HNT) token. The SEC reached a settlement with Nova Labs in April, resulting in the dismissal of the lawsuit and a $200,000 civil penalty.
