The Securities and Exchange Commission (SEC) of the United States has taken legal action against 17 individuals who are accused of orchestrating a Ponzi scheme worth $300 million through the crypto trading platform, CryptoFX. The platform was registered as a legitimate crypto trading platform in Houston in February 2020. However, in September 2022, the SEC filed an emergency action to halt all operations of CryptoFX after suspecting it of being a crypto-asset Ponzi scheme. On March 14, 2024, the SEC identified 17 individuals allegedly involved in the fraudulent scheme.
Gurbir Grewal, the director of the SEC’s Division of Enforcement, stated that CryptoFX specifically targeted crypto investors from the Latino community across 10 U.S. states and two foreign countries. Grewal emphasized that a Ponzi scheme of this magnitude requires the involvement of numerous participants, and therefore, the SEC has charged the main architects and perpetrators.
The SEC’s investigation revealed that several individuals associated with CryptoFX misused investors’ funds by making false promises of investments in highly profitable cryptocurrencies and nonfungible tokens (NFTs). These fraudulent activities took place during the ongoing bull market of the crypto industry, which enticed investors to participate.
The SEC has requested the court to charge the 17 individuals with various violations of the Securities and Exchange Act. Additionally, the SEC is seeking to recover the funds obtained through the Ponzi scheme and impose civil penalties on the accused individuals.
In other news, the SEC recently announced a delay in its decision regarding the approval of options trading on spot Bitcoin exchange-traded funds (ETFs). The agency has postponed its decision for another 45 days, with a final decision expected by April 24.