SEC Reveals $300M Ponzi Scheme Targeting Latinos, Falsely Touting Crypto Investments

• SEC charged 17 people in a $300 million Ponzi scheme targeting Latino investors involving CryptoFX.

• Defendants promised high returns but mostly used funds to sustain the scheme and finance their lifestyles.

The Securities and Exchange Commission (SEC) recently brought charges against 17 individuals implicated in a $300 million Ponzi scheme. Over 40,000 Latino investors were the target of the plan, which promised them significant financial returns through cryptocurrency and foreign exchange investments. This disclosure follows the SEC’s initial action in September 2022, which led to the company ceasing operations at the core of the purported scam, CryptoFX. Mauricio Chavez and Giorgio Benvenuto, the alleged scheme masterminds, are among those facing charges.

According to the complaint filed in federal court in Houston, Texas, the defendants allegedly performed crucial roles as “leaders” inside the CryptoFX network. They allegedly lured investors in with claims of amazing returns on their money, anywhere from 15 to 100 percent.

Investigations show that the defendants did not engage in genuine trading operations as indicated; instead, they mostly siphoned the funds to maintain the Ponzi scam. Rather, they paid themselves commissions and bonuses, funded extravagant lifestyles, and fulfilled supposed returns to previous investors.

Two of the defendants, Gabriel and Dulce Ochoa, continued to seek investments from potential investors even after the court ordered CryptoFX to suspend operations. Gabriel Ochoa is additionally charged with pressuring two investors to withdraw their SEC complaints in exchange for the return of their capital. Federal securities laws contain several anti-fraud, securities-registration, and broker-registration prohibitions that the SEC has charged Gabriel and Dulce Ochoa, Maria Saravia, Gloria Castaneda, Ismael Zarco Sanchez, and Roberto Zavala with breaking.

Legal Ramifications and Defendant Responses

For each defendant in the scheme, the SEC is requesting civil fines, disgorgement with prejudgment interest, and permanent injunctions. Notably, two defendants, Serranos and Taffinder, have already agreed to pay a total of more than $68,000 in final judgments, subject to court approval. This lawsuit comes after an earlier one by the SEC against Chavez and Benvenuto that resulted in more defendants being linked to the scam.

In an attempt to profit from the excitement surrounding the current cryptocurrency bull market, the SEC claims that those connected to CryptoFX misled investors by making false promises about investments in lucrative cryptocurrencies and nonfungible tokens (NFTs).

In a separate but related development, the SEC recently announced a delay in its decision regarding options trading on spot Bitcoin exchange-traded funds (ETFs). The authorities stated that it would require “sufficient time” to evaluate the effects of permitting the trading of Bitcoin ETF options. As a result, the SEC has given itself an additional 45 days to evaluate the matter, and a final decision is anticipated on April 24.

The SEC’s efforts to stop fraudulent schemes in the cryptocurrency field are demonstrated by the actions taken against the persons associated with CryptoFX. The case should serve as a warning to investors to proceed with caution and perform extensive due diligence before taking advantage of any investment opportunity, particularly in developing and unstable markets such as cryptocurrencies.

Additionally, the outcome of the SEC’s investigation into CryptoFX and its decision on Bitcoin ETF options trading will undoubtedly shape the regulatory landscape for cryptocurrencies in the United States.