SEC Charges 17 with $300 Million Ponzi Scheme

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  • The SEC has charged 17 individuals for their roles in a $300 million Ponzi scheme linked to CryptoFX
  • The agency contends that funds were misused for personal expenses, prompting it to seek injunctions and penalties
  • Two defendants threatened to withhold funds if investors didn’t withdraw their complaints to the SEC

The Securities and Exchange Commission (SEC) yesterday filed charges against 17 individuals involved in a $300 million Ponzi scheme linked to CryptoFX LLC, based in Houston, Texas. Targeting over 40,000 mainly Latino investors across the US and two other nations, the scheme promised ‘risk-free’ crypto and foreign exchange investments, according to SEC Director of Enforcement, Gurbir S. Grewal, but the funds ultimately went to maintaining the operators’ luxurious lifestyle. Two of the defendants have consented to the final judgment, paying over $68,000.

Operators Funded Lavish Lifestyle with Investments

The SEC alleges that CryptoFX operated as a Ponzi scheme, with investors lured by promises of guaranteed riches. From May 2020 to October 2022, the 17 charged individuals from several states acted as leaders in the CryptoFX network, purportedly generating returns of 15 to 100 percent.

However, the SEC alleges that the majority of the $300 million raised was not used for trading as claimed but was, in a tale as old as time, allegedly utilized to pay returns to earlier investors, commissions, bonuses, and personal expenses of the defendants.

Couple Ignored Emergency Action

An emergency action against the founders and operators was filed in September 2022, but two of the defendants, spouses Gabriel and Dulce Ochoa, continued to solicit investments even after the court ordered them to halt.

Gabriel Ochoa instructed two investors to rescind their complaints to the SEC if they wanted to see their money, while another defendant, Maria Saravia, allegedly told investors that the SEC’s lawsuit was fake. Gabriel Ochoa is also accused of violating whistleblower protection provisions.

Two defendants, Luis Serrano and Julio Taffinder Serrano, consented to final judgments, pending court approval, permanently restraining them from violating securities-registration and broker-registration provisions. They also agreed to pay over $68,000 combined in penalties, disgorgement, and interest. The SEC seeks permanent injunctions, disgorgement with prejudgment interest, and civil penalties against each defendant.