SEC Stops Crypto Ponzi Operation Targeting Latino Investors
The US Securities and Exchange Commission (SEC) has filed an emergency action to stop an ongoing crypto Ponzi scheme targeting Latino investors.
According to an SEC press release, the scheme was run by defendants Mauricio Chavez and Giorgio Benvenuto through CryptoFX – a company Chavez founded and controlled.
Details of the case disclosed in the SEC complaint claim that Chavez pioneered the scheme in 2020 when he began holding paid classes “for the ostensible purpose of educating and empowering the Latino community to build wealth through the trading of cryptoassets.”
However, he had no background, education or training in investments or crypto-assets. The classes and seminars were just a channel to encourage the “unsophisticated investors” to give their money to Texas-based CryptoFX to allegedly use in trading currencies and cryptos.
For his part, Benvenuto allegedly encouraged a major investor into the scheme and helped divert funds from the scheme through the CBT Group, a company he controls with Chavez. The scheme raised over $12 million from around 5,000 investors in this way.
Chavez and Benvenuto continued to use more than 90% of the funds to pay false returns to investors, support lavish lifestyles, and buy and develop real estate. The SEC alleges that the duo made approximately $2.7 million in Ponzi payments while spending nearly $8 million for their spending, including nearly $1.5 million that Chavez spent on cars, credit card payments, jewelry, adult entertainment and a house in his wife’s name.
SEC cracks down on crypto Ponzi schemes
The SEC charges the defendants with charges including violations of the anti-fraud provisions of the Securities Act of 1933 and the Securities Exchange Act; breach of the Investment Advisers Act of 1940, and breach of the securities registration provisions of the Securities Act.
The SEC is seeking a permanent injunction, civil penalties and the return of ill-gotten gains with interest, as well as barring Chavez and Benvenuto from serving as officers or directors of a public company.
The press release adds that the US District Court for the Southern District of Texas has issued an order freezing the defendants’ assets and also granted other relief.
The case is just the latest bust by the SEC in its redoubled efforts to end fraud in the crypto space and provide regulation for the market. Back in August, the securities market watchdog filed charges against 11 people involved in operating and promoting the $300 million Forsage crypto Ponzi scheme, as reported by Reuters.
