SEC Accuses 17 Individuals in $300 Million CryptoFX Ponzi Scheme; Delays Decision on Bitcoin ETF
Summary:
The U.S. Securities and Exchange Commission (SEC) has implicated 17 individuals for operating a $300 million Ponzi scheme through the crypto trading platform, CryptoFX. Predominantly targeting Latino investors, they allegedly guaranteed large returns on 'risk-free' crypto and forex investments. Various individuals misused investors’ funds by falsely promising investments in cryptocurrencies and nonfungible tokens. The SEC now demands a court order for the return of funds, plus additional civil penalties. Separately, the SEC has postponed its decision on the approval of Bitcoin ETF options trading until April 24.
In a recent development, the U.S. Securities and Exchange Commission (SEC) has indicted 17 individuals in relation to a Ponzi scheme worth $300 million. This scheme was ostensibly operated through CryptoFX, a crypto trading platform based in Houston, registered in February 2020. In September 2022, the SEC launched urgent measures to cease all CryptoFX activities after it raised suspicions of an ongoing crypto-asset Ponzi scheme. On March 14, close to 18 months after the halt, the SEC named the 17 individuals it believes were implicated in the scheme. The implicated individuals allegedly conned investors by guaranteeing hefty returns on ‘risk-free’ and ‘guaranteed’ crypto and forex instruments, primarily from the Latino community across 10 U.S states and two foreign countries.
Gurbir S. Grewal, director of the SEC’s Division of Enforcement, claimed that CryptoFX was a $300 million scam, which preyed predominantly on Latino investors with the temptation of financial liberty and extreme wealth creation. He further explained that for carrying out a Ponzi scam of this magnitude, multiple participants were involved, who are now charged as the main orchestrators and executors of this scam.
The SEC's investigation revealed that numerous individuals linked with CryptoFX illegally used investors' funds, making false promises about lucrative investments in various cryptocurrencies and nonfungible tokens (NFTs). Investors were enticed during the prevailing crypto bull market. Consequently, the SEC has demanded a court order directing the accused to refund the funds, and pay further civil penalties for violation of relevant sections of the Securities and Exchange Act.
In another related incident on March 6, the SEC delayed its decision on the approval of options trading on spot Bitcoin exchange-traded funds (ETFs). The SEC’s filing cites the need for "sufficient time" to decide on the Bitcoin ETF options trading and has postponed its final decision until April 24, using an extra 45 days from its legally permissible 90 days.
Published At
3/15/2024 9:40:23 AM
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