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.
CryptoFX, which was registered as a crypto trading platform in Houston in February 2020, had its operations halted by the SEC in September 2022 after suspicions arose that it was operating as a crypto-asset Ponzi scheme. The SEC has now identified 17 individuals allegedly involved in the scheme.
According to Gurbir Grewal, director of the SEC’s Division of Enforcement, 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 many participants, and as such, the SEC has charged the principal architects and perpetrators.
The SEC’s investigation revealed that several individuals associated with CryptoFX misused investors’ funds by falsely promising investments in potentially lucrative cryptocurrencies and nonfungible tokens (NFTs). Investors were enticed by the ongoing crypto bull market at the time.
The SEC has requested that the court charge the 17 individuals with violating various sections of the Securities and Exchange Act. Additionally, the SEC is seeking the return of the funds and civil penalties for the violations.
In other news related to the SEC, the agency has postponed its decision on approving options trading on spot Bitcoin exchange-traded funds (ETFs). The SEC’s decision has been deferred for an additional 45 days, with the final decision expected to be made on April 24.