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SEC Arrests CryptoFX for Running $300 Million Ponzi Scheme

by SuperiorInvest

The United States Securities and Exchange Commission (SEC) has charged 17 people with orchestrating a $300 million Ponzi scheme under the guise of crypto trading platform CryptoFX.

CryptoFX was registered as a cryptocurrency trading platform in Houston in February 2020. In September 2022, the SEC filed an emergency action to stop all operations of CryptoFX, suspecting an ongoing cryptoasset Ponzi scheme. Approximately 18 months later, on March 14, the SEC identified 17 people allegedly involved in the scheme.

The US SEC charges 17 people linked to crypto exchange CryptoFX for allegedly running a $300 million Ponzi scheme. Fountain: @SECGov in X

In the words of Gurbir S. Grewal, director of the SEC's Division of Enforcement:

“We allege that CryptoFX was a $300 million Ponzi scheme targeting Latino investors with promises of financial freedom and life-altering wealth from 'risk-free' and 'guaranteed' crypto and currency instruments.”

According to the SEC, CryptoFX allegedly targeted crypto investors from the Latino community in 10 US states and two foreign countries. Grewal said a Ponzi scheme of such magnitude requires many participants, and the SEC charged the main architects and perpetrators.

The SEC found that several individuals linked to CryptoFX misappropriated investor funds by falsely promising investments in potentially lucrative cryptocurrencies and non-fungible tokens (NFTs). At the time, investors were attracted to the current cryptocurrency bull market.

The SEC requested that the court charge the individuals with violating various sections of the Securities and Exchange Act. Additionally, the SEC wants the 17 people to “return” or return the funds and also pay civil penalties for the violations.

Related: Senators Pressure SEC's Gensler Not to Approve More Crypto ETFs

On March 6, the SEC publicly postponed its decision on approving options trading in spot Bitcoin (BTC) exchange-traded funds (ETFs).

A notable excerpt from the SEC filing cites the need for “sufficient time” to decide whether to allow Bitcoin ETF options trading. Source: SEC

Its postponement gives the agency another 45 days (its maximum under the law is 90 days) to reach a final decision, which is April 24.

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