The U.S. Securities and Exchange Commission (SEC) has filed a lawsuit against Ramil Ventura Palafox, the CEO and founder of PGI Global, for orchestrating a Ponzi scheme that defrauded investors of approximately $198 million through cryptocurrency and forex investments. The lawsuit, which was filed in the U.S. District Court for the Eastern District of Virginia, accuses Palafox of running a fraudulent investment operation that promised exorbitant returns to participants while never conducting any legitimate trading activities.
The Scheme’s Operation
PGI Global, which operated from January 2020 to October 2021, sold “membership packages” to investors, promising returns as high as 200% through a trading platform based on artificial intelligence (AI) for crypto and forex markets. The company also employed a multi-level marketing (MLM) structure to recruit new investors, further inflating the scheme’s reach.
The SEC’s investigation found that PGI Global never engaged in any actual trading. Instead, Palafox used the funds raised from new investors to pay returns and commissions to earlier investors, maintaining the appearance of profitability in a typical Ponzi-style operation. The scheme collapsed by the end of 2021, leaving thousands of investors with significant losses.
Personal Use of Fraudulent Funds
The SEC also accuses Palafox of diverting over $57 million from the investment pool for his personal use, including the purchase of luxury assets. Among his expenditures, Palafox allegedly bought a $1.7 million property in Las Vegas, expensive cars, jewelry, and high-end fashion items. The SEC claims that these purchases were made with funds stolen from investors.
Additionally, Palafox is accused of transferring substantial assets to family members through the company BBMR Threshold LLC, including:
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A $320,000 mortgage payment for his brother-in-law.
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A $169,000 debt payment and a Range Rover gift for his mother.
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$1.18 million worth of jewelry and designer items for his wife.
SEC’s Legal Demands
In response to the fraudulent activities, the SEC has requested that the court impose a permanent ban on Palafox from engaging in any securities or cryptocurrency-related activities. The SEC also seeks the full restitution of the stolen funds and civil penalties. Alongside these civil actions, the U.S. Department of Justice has filed criminal charges against Palafox for wire fraud, money laundering, and illegal money transmission. If convicted, Palafox could face significant prison time and the forfeiture of his assets.
Legal Precedents and Consequences
This case is not the first of its kind; in September 2022, the UK’s High Court dissolved PGI Global UK Ltd for operating a similar fraudulent crypto investment scheme. Additionally, the U.S. Department of Justice and the Internal Revenue Service (IRS) seized PGI Global’s website in October 2021. Palafox is believed to be in hiding, and it is suspected that he may have fled the United States to avoid prosecution.
Implications for the Crypto Industry
This lawsuit is a landmark case for the SEC under the leadership of Chairman Paul Atkins, marking the agency’s first major crypto-related legal action in this new era. The SEC’s focus under Atkins has been on creating a more transparent, stable, and crypto-friendly regulatory environment while also addressing prior regulatory overreach and suspending several cases that were seen as inconsistent with the unique nature of digital assets.
The outcome of this case could set a significant precedent for future regulatory and enforcement actions in the rapidly growing cryptocurrency market, signaling that the SEC is committed to holding individuals accountable for fraudulent activities while seeking to ensure a safer environment for legitimate blockchain and crypto ventures.
Liam Trace 
May