US SEC Charges 17 in $300M Crypto Ponzi Scheme

The United States Securities and Exchange Commission (SEC) has charged 17 individuals for allegedly perpetrating a cryptocurrency Ponzi scheme that defrauded thousands of Latino investors in the country for approximately $300 million.

According to an official release from the regulator, the alleged fraudsters operated under a company named CryptoFX LLC, which is based in Houston, Texas.

SEC Charges 17 For Crypto Fraud

The SEC’s complaint accused Mauricio Chavez and Giorgio Benvenuto, the two main operators of CryptoFX, of targeting more than 40,000 predominantly Latino investors in the U.S. through the Ponzi scheme.

From May 2020 to October 2022, CryptoFX posed as a platform for trading crypto assets and in foreign exchange markets, with the 17 charged individuals acting as leaders of the network. The leaders, from Texas, California, Louisiana, Illinois, and Florida, solicited investments from victims with promises of 15% to 100% returns.

Through the Ponzi scheme, the perpetrators raised $300 million to fund their lifestyles. Instead of trading cryptocurrencies and foreign exchange as claimed, the alleged fraudsters used the funds to pay purported returns to other investors and pay themselves commissions and bonuses.

Commenting on the case, Gurbir S. Grewal, Director of the SEC’s Division of Enforcement, said: “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 investments.”

SEC Seeks Disgorgement And Civil Penalties

Furthermore, two defendants, Gabriel and Dulce Ochoa, who are husband and wife, kept soliciting investments from victims after a court ordered the halt of CryptoFX in September 2022. At some point, Gabriel asked two investors to direct their complaints to the SEC to recover their investments. Another defendant, Maria Saravia, claimed the SEC’s lawsuit was fake when investors began to express concerns.

While some defendants have consented to the entry of final judgments without admitting or denying the allegations, the SEC seeks permanent injunctions, disgorgement with prejudgment interest, and civil penalties against others.

 “In the end, the only thing that CryptoFX guaranteed was a trail of thousands upon thousands of victims stretching across ten states and two foreign countries. A scheme of that size requires lots of participants, and as today’s action demonstrates, we will pursue charges against not just the principal architects of these massive schemes, but all those who further their fraud by unlawfully soliciting victims,” added Grewal.