Federal prosecutors and regulators have charged a man they claim operated a massive cryptocurrency fraud scheme that swindled $200 million from 90,000 investors.
Ramil Palafox, a dual US and Philippines citizen, allegedly stole more than $57 million from January 2020 through October 2021 through his firm PGI Global, according to charges filed April 22.
How The Scheme Worked
The Securities and Exchange Commission alleges Palafox recruited investors by making false representations that he had cryptocurrency knowledge and an AI-driven trading platform.
Spending On Personal Items
“Palafox lured in investors with the promise of sure profits through sophisticated trading of crypto assets and foreign exchange, but rather than trading, Palafox purchased himself and his family cars, watches, and homes with millions of dollars of investor money,” Scott Thompson, associate director of the SEC’s Philadelphia office, said.
Court papers indicate that if convicted, Palafox would lose more than $1 million in cash and a stunning fleet of 17 vehicles. His fleet includes two Teslas, a Ferrari 458 Special, two Lamborghinis, and two Porsches.
A screenshot of the SEC complaint vs. Ramil Palafox. Source: SEC
Regulators disclosed Palafox held lavish recruitment parties in Dubai and Las Vegas where he paid members a bonus for recruiting new investors.
The investigators further listed several designer handbags, wallets, footwear, jewelry, and watches under assets linked to the suspected fraud.
The funds from new investors were not invested in trading as guaranteed but were diverted to settle previous investors and finance Palafox’s extravagant lifestyle.
BTCUSD trading in the $93,417 region on the 24-hour chart: TradingView.com
False Promises Of High Returns
Federal authorities indicted Palafox on charges of wire fraud, money laundering, and illegal monetary transactions in an indictment submitted March 13. They claim he deceived investors by guaranteeing daily returns of between 0.5% and 3% on Bitcoin trading.
Palafox allegedly informed investors that his traders could make money no matter if the price of Bitcoin was up or down. According to Justice Department investigations, the majority of investors’ funds were never used to purchase or sell Bitcoin at all, and many individuals lost part or all of their investments.
First Major Case Under New SEC Leadership
The case is the first cryptocurrency-related enforcement action since the SEC’s new chairman, Paul Atkins, began office on April 22.
Atkins has been characterized as “crypto-friendly” in his regulatory style. The SEC is requesting a number of penalties against Palafox, including a permanent injunction from selling securities and crypto assets, restitution of ill-gotten gains, and civil fines.
The move comes after another recent crypto enforcement case against Nova Labs, concluded in April on a settlement and $200,000 civil penalty following allegations of selling unregistered securities using Helium token mining hardware.
Featured image from Outseer, chart from TradingView
