A $198 million crypto fraud operation, masked as AI trading, has been uncovered, revealing a Ponzi scheme fueled by luxury spending and stretched across the globe.
It was announced by the U.S. Securities and Exchange Commission (SEC) on April 22 that Ramil Palafox, founder of PGI Global, had been charged for orchestrating a massive fraudulent scheme that collected approximately $198 million from investors across the globe. As detailed in the SEC’s complaint, PGI Global was portrayed as a “crypto asset and foreign exchange trading company.”
It has been alleged by the agency that investor funds were not used for legitimate trading activities but were instead diverted by Palafox, with more than $57 million spent on luxury personal purchases, including high-end vehicles and costly merchandise. The remainder of the investor capital was reportedly utilized to distribute false returns and referral rewards under a Ponzi-style scheme that collapsed in 2021. The deceptive nature of the operation was emphasized by Scott Thompson, Associate Director of the SEC’s Philadelphia Regional Office.
As alleged in our complaint, Palafox attracted investors with the allure of guaranteed profits from sophisticated crypto asset and foreign exchange trading, but instead of trading, Palafox bought himself and his family cars, watches, and homes using millions of dollars of investor funds.
Between January 2020 and October 2021, “membership” packages and referral incentives were offered by PGI Global, which were characterized by the SEC as multi-level marketing tactics designed to lure additional victims under the pretense of providing consistent returns.
In reality, his false claims of crypto industry expertise and a supposed AI-powered auto-trading platform were just masking an international securities fraud.
The SEC detailed:
Comprehensive penalties have been sought by the regulator in its complaint, including permanent injunctive relief, conduct-based injunctions barring Palafox from engaging in multi-level-marketing activities tied to securities or crypto asset offerings, disgorgement of illicit gains with prejudgment interest, and the imposition of civil penalties. Criminal charges have additionally been filed by the U.S. Attorney’s Office for the Eastern District of Virginia. The SEC has stated that its investigation is still ongoing.
