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The SEC has charged Ramil Palafox with a staggering $198 million Ponzi-style crypto scam, raising concerns over rising fraudulent activities in the crypto space.
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Palafox’s deceptive operation was structured as a multi-level marketing scheme, falsely promising investors high returns from crypto and forex trading.
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Scott Thompson, Associate Director of the SEC’s Philadelphia Office, stated, “Palafox attracted investors with the allure of guaranteed profits, but instead misused their funds for personal luxuries.”
This article explores Ramil Palafox’s $198 million Ponzi scheme charged by the SEC, highlighting regulatory efforts to combat crypto fraud.
SEC Cracks Down on Massive Crypto Scam
The US Securities and Exchange Commission (SEC) has taken decisive action against Ramil Palafox, a dual national of the US and the Philippines, for orchestrating a significant crypto scam totaling $198 million. Operating from January 2020 to October 2021, Palafox’s Ponzi-style scheme, conducted through his company PGI Global, defrauded numerous investors globally.
According to the SEC’s allegations, Palafox promised exorbitant returns on investments derived from cryptocurrency and foreign exchange trading. However, it was later revealed that he misappropriated over $57 million of investor funds for lavish personal expenses, including cars, luxury watches, and real estate.
“As alleged in our complaint, Palafox attracted investors with the allure of guaranteed profits from sophisticated crypto assets and foreign exchange trading, but instead of trading, Palafox bought himself and his family cars, watches, and homes,” stated Scott Thompson, emphasizing the deceptive nature of Palafox’s claims.
Notably, the scheme employed a multi-level marketing (MLM) model that attracted investors by promoting fictitious expertise in the crypto sector and offering an alleged AI-driven trading platform. These claims were quickly debunked as fraudulent, leading to the eventual collapse of the operation in 2021 and significant financial losses for many investors.
The SEC’s complaint, filed in the US District Court for the Eastern District of Virginia, accuses Palafox of breaching anti-fraud and registration provisions under federal securities laws. The SEC is seeking the return of the ill-gotten gains, civil penalties, and a permanent injunction to prevent future violations. Additionally, the US Attorney’s Office has initiated criminal charges against him, signaling a robust federal response to financial misconduct.
Iranian National Charged for Running Dark Web Marketplace
In a related yet distinct case, federal authorities have indicted Iranian national Behrouz Parsarad for allegedly founding and operating the dark web marketplace known as Nemesis. This platform has been implicated in the illegal sale of various drugs, including fentanyl, and has facilitated numerous criminal activities including financial data theft and malware distribution.
From 2021 to 2024, the Nemesis marketplace reportedly processed over 400,000 orders, indicating its extensive operational scale. Parsarad is not only charged with drug trafficking but also with money laundering for utilizing cryptocurrency to obfuscate the proceeds from illegal transactions.
“Nemesis users were not allowed to conduct transactions in official, government-backed currencies,” noted the press release from the US Office of Public Affairs, which underscores the marketplace’s commitment to operating outside legal financial systems.
If convicted, Parsarad faces a mandatory minimum sentence of 10 years in federal prison, with potential penalties escalating to life imprisonment. This case adds to the growing list of law enforcement actions targeting the exploitation of cryptocurrency for criminal undertakings. Recently, the FBI also apprehended Anurag Pramod Murarka for laundering over $24 million through the dark web, signifying a firm crackdown on such illicit activities.
Conclusion
These cases illuminate the increasing vigilance of US regulatory authorities in combating cryptocurrency fraud and the broader implications for investor security. The significant actions taken against Palafox and Parsarad demonstrate a commitment to enforcing existing laws and protecting the interests of the public. Investors are urged to exercise caution and conduct thorough due diligence before engaging with any cryptocurrency investment opportunities to safeguard against potential scams.
