SEC Charges Crypto Founder With $200M Ponzi Scheme

The U.S. Securities and Exchange Commission (SEC) has charged Ramil Palafox, the founder of the now-defunct crypto and foreign exchange investment company PGI Global, with violating federal securities laws. The SEC alleges that Palafox ran a "Ponzi-like scheme" that defrauded investors of nearly $200 million. According to the charges, Palafox misappropriated over $57 million of customer money, spending it on luxury items such as Lamborghinis, real estate, and other high-end goods.

Palafox, 59, of Las Vegas, Nevada, also faces parallel criminal charges tied to his role at PGI Global. In March, a Virginia grand jury charged him in a 23-count indictment that included eight counts of wire fraud. Due to his "substantial ties" to the Philippines, including dual citizenship, the judge overseeing his criminal case issued an order that he should remain in custody until further notice.

According to court documents, PGI Global operated as a crypto investment scheme from January 2020 to October 2021. Approximately 90,000 investors worldwide purchased membership packages with either bitcoin or fiat currency, promised hefty returns on their investments—up to 3% daily and a 200% total return. However, instead of investing clients’ money, prosecutors allege that Palafox spent over a quarter of the funds to unjustly enrich himself and his family members. The rest of the money was used to pay back earlier investors in the scheme until it collapsed.

Laura D’Allaird, chief of the SEC’s new Cyber and Emerging Technologies Unit, stated, “Palafox used the guise of innovation to lure investors into lining his pockets with millions of dollars while leaving many victims empty-handed. In reality, his false claims of crypto industry expertise and a supposed AI-powered auto-trading platform were just masking an international securities fraud.”

Since the beginning of U.S. President Donald Trump’s second term in January, the SEC has overhauled its approach to crypto regulation, dropping investigations and some litigation against crypto companies tied to purported securities violations. However, the SEC has promised to continue pursuing crypto-related securities fraud. Similarly, the Department of Justice (DOJ) has narrowed its approach to crypto-related prosecution, focusing on individuals who victimize digital asset investors.

In Palafox’s case, the SEC is aiming to recover investors’ money, plus interest and civil penalties, and to obtain injunctive relief that would prevent him from committing similar crimes in the future. The SEC is also seeking to recover money from several of Palafox’s family members, including his wife, Marissa Mendoza Palafox, and his brother-in-law, Darvie Mendoza. The DOJ has stated that if found guilty, Palafox is facing "at least 108-135 months’ imprisonment," or 9 to 11 years.

Palafox’s lawyer declined to comment on the charges. The case against Palafox highlights the risks associated with unregulated crypto investments and the importance of regulatory oversight in protecting investors from such schemes. The collapse of PGI Global in 2021 marked the end of this fraudulent operation, leaving many investors with significant financial losses. The charges against Palafox underscore the need for vigilance and due diligence in the crypto investment space.