US Securities and Exchange Commission filed their first case related to crypto under the new chair Paul Atkins. The case targets PGI Global CEO Ramil Palafox, who is accused of running a crypto Ponzi scheme worth millions.
The Eastern District of Virginia received a formal complaint on April 22 accusing Palafox of bilking over 90,000.00 investors of almost $198.000 through a fake AI-powered crypto trading platform which boasted a trading automated system.
What is PGI Global Scam?
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The SEC filed a complaint alleging that between January 2020 to October 2021 Palafox promised investors guaranteed returns from Bitcoin and Forex trading. Daily returns up to 200% were offered.
PGI Global, on the other hand, operated as a Ponzi scheme, using money from new recruits in order to pay previous participants.
It relied on the multilevel marketing model (MLM), whereby investors received referral bonuses in order to attract others. This created a cycle of self-sustainability that continued until 2021, when the platform crashed. The UK operations were closed by the U.K. High Court in the year following.
PGI Global did not have the “Auto Trading System” that was promised and traded very little.
Investors were led to believe that their investments would grow by using fake dashboards, crypto-circular transactions and doctored results.
Palafox is accused by the SEC of misusing over $57,000,000 in investor funds to purchase luxury goods and property. The SEC alleges that Palafox misused over $57 million of investor funds by acquiring luxury items and real estate.
The act also included lavish recruitment events held in Dubai and Las Vegas to attract more victims, under the pretense of a lucrative business.
Palafox has been charged for violating federal securities laws’ anti-fraud rules and regulations relating to registration.
Palafox is also barred from all securities and cryptocurrency ventures. The regulator wants to reclaim funds for investors, fines civil and seize assets linked to the scam.
The US Attorney’s Office (part of the US Department of Justice) also filed parallel criminal charges. Both the SEC and DOJ filed civil and criminal complaints.
The 13th of March is a day to remember, including the crimes of wire fraud, laundering money, and illegal monetary transactions.
Palafox is accused by prosecutors of misleading investors regarding PGI’s financial standing and its regulatory status, while concealing the fact that a majority of their money was never invested.
SEC rolls back crypto enforcement cases
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The commission’s stance towards crypto-enforcement appears to have softened under the new leadership. While it continues to focus on frauds like PGI Global, the commission is still pursuing clear-cut cases of fraud.
This is the first case filed by the SEC under the new Chair, Paul Atkins. Atkins was only sworn into office a few days before the filing.
Atkins, who was known for his market-friendly approach in his previous tenure with the SEC signals that he may be moving away from Gary Gensler’s hardline stance on regulatory issues.
The SEC dropped several high profile cases against crypto companies, such as Consensys Crypto.com and MetaMask, since Gensler resigned.
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