The US Securities and Exchange Commission (SEC) has filed charges against Ramil Palafox, founder of crypto platform PGI Global, over an alleged fraud scheme involving roughly $198 million raised from investors worldwide.
The complaint, filed in the US District Court for the Eastern District of Virginia, outlines how investor funds were allegedly misused to finance personal luxury purchases while operating a business model that closely resembled a Ponzi scheme.
The Allegations And The Orchestration
According to the SEC, PGI Global presented itself as a crypto asset and foreign exchange trading platform, offering high-yield returns and referral incentives to bring in new participants.
However, from January 2020 to October 2021, the company’s operations were allegedly focused more on enriching insiders than conducting any legitimate investment activity.
The SEC claims over $57 million of investor funds were diverted for personal use, including the purchase of vehicles, watches, and real estate, while remaining funds were used to repay earlier investors to maintain the illusion of profitability.
The SEC’s complaint accuses Palafox of violating anti-fraud and registration provisions under federal securities laws. Associate Director Scott Thompson of the SEC’s Philadelphia Regional Office stated that Palafox misled investors with claims of guaranteed profits from crypto and forex trading, while allegedly using the funds to benefit himself and his family.
The SEC emphasized that no actual trading was being conducted and that returns paid out to earlier investors were funded primarily by capital from newer participants. The platform reportedly used multi-level marketing tactics to expand its investor base, offering commissions and incentives to those who referred others.
The model, according to the SEC, eventually became unsustainable, collapsing when incoming funds could no longer cover the promised returns. The complaint names several individuals and entities as relief defendants, including BBMR Threshold LLC, Darvie Mendoza, Marissa Mendoza Palafox, and Linda Ventura, for their alleged receipt of funds tied to the scheme.
New SEC Unit Targets Tech Fraud; Criminal Charges Filed in Parallel
The case is also the first high-profile action brought by the SEC’s Cyber and Emerging Technologies Unit (CETU), which was launched in February to replace the prior Crypto Assets and Cyber Unit.
CETU, led by Laura D’Allaird, is focused on fraud involving new technologies such as crypto and artificial intelligence. D’Allaird commented that the false marketing of PGI Global as a tech-savvy platform with AI-driven trading features was part of a larger effort to mislead investors.
In parallel to the SEC’s civil action, the U.S. Attorney’s Office for the Eastern District of Virginia has filed criminal charges against Palafox.
He was arraigned in federal court, with the ongoing investigation supported by the FBI and the Internal Revenue Service (IRS). The SEC is seeking permanent injunctions to bar Palafox from future securities offerings, alongside disgorgement of funds, prejudgment interest, and civil penalties.
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