Key takeaways:
- Under cover of the cryptocurrency trading platform CryptoFX, the US SEC has charged 17 persons with organizing a $300 million Ponzi scam.
- The SEC claims that CryptoFX purportedly targeted Latino cryptocurrency investors in ten US states and two other nations.
Under cover of the cryptocurrency trading platform CryptoFX, the United States Securities and Exchange Commission (SEC) has charged 17 persons with organizing a $300 million Ponzi scam.
In February 2020, CryptoFX registered as a cryptocurrency trading platform in Houston. Suspecting that CryptoFX was an ongoing Ponzi scheme involving cryptoassets, the SEC filed an emergency action to cease all operations of the company in September 2022.
On March 14, about eighteen months later, the SEC announced the names of seventeen people who were allegedly part of the scam. The SEC’s Division of Enforcement Director, Gurbir Grewal, stated:
“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 instruments.”
The SEC claims that CryptoFX purportedly targeted Latino cryptocurrency investors in ten US states and two other nations. According to Grewal, a Ponzi scheme of this size needs many participants, and the SEC has charged the main organizers and those who carried out the scheme.
The SEC discovered that multiple persons associated with CryptoFX embezzled customers’ money by fabricating claims of profitable cryptocurrency and nonfungible token (NFT) investments. Investors were drawn in by the continuing bull market for cryptocurrencies.
The 17 people violated the Securities and Exchange Act, and the SEC asked the court to charge them. The SEC also requires the 17 people to “disgorge,” or return, the money and pay extra civil fines for the infractions.
The SEC publicly delayed its judgment on March 6 over whether to allow options trading on spot Bitcoin Exchange Traded Funds (ETFs) that are spot market.
With this deferral, the agency will have an additional 45 days—the legislation allows for a maximum of 90 days—to make a final decision by April 24.
