- SEC charges Ramil Palafox with $198M crypto Ponzi scheme through PGI Global, simulating AI trading.
- Palafox pocketed $57M for luxuries, used others’ money to pay investors in Ponzi arrangement.
- SEC seeks Palafox banned, money refunded, and family to return unlawfully gained funds.
The U.S. SEC says a man named Ramil Palafox ran a large scam using a false crypto company called PGI Global. Between 2020 and 2021, he tricked people into sending him $198 million by promising high returns from an AI trading system that didn’t exist.
How the Scam Worked
Instead of putting the money in the business, the SEC says Palafox diverted over $57 million into his own pocket. He spent it on fancy items such as a $1.7 million mansion, Lamborghinis, and high end jewelry.
It also states that he spent some of it paying early investors, so the company would appear to be authorized. This is known as a Ponzi scheme, where the money from new investors is spent to pay older investors.
SEC Takes Action
It brought this case to a Virginia court. It is their first case involving crypto since their new leader, Paul Atkins, began just one day earlier. They indicate that Palafox sold “membership packages” that were real unregistered securities, which is illegal. He also employed artificial dashboards that displayed false profits and kept clients engaged.
The SEC is requesting the court to prohibit Palafox from engaging in this type of business again. They are requesting that he repay the money he stole and be fined. They also charged his wife, mother, and brother in law in the case, stating they received some of the stolen funds, such as a mortgage paid off and high end items. It wants them to repay that money as well.
In addition to this, Palafox also has criminal charges filed against him by another agency of the government. It claims, that he failed to cooperate during the investigation and that his firm’s website was taken down by the government. This case indicates how the SEC is going after individuals who perpetrate scams in the crypto market.
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