This new crypto scam operation is targeting Latino residents
Crypto enthusiasts and users understand the risks inherent in digital asset investments. In addition to losing funds in price crashes, investors can lose money through fraud, pump-and-dump schemes, exchange and protocol hacks, Ponzi schemeetc.
Recently, many Latino investors have been victimized by a crypto Ponzi scheme that resulted in the loss of funds. A warning from City Hall revealed that up to 30 residents had fallen victim to this scam operation, and warned others to be careful.
Crypto Ponzi scheme requires investor funds
The Latin Times report shared that up to 30 victims of the operation have notified authorities of their losses to the scammers. In detail, the people behind the scam are employees of CryptoFX LLC, a company that is currently involved in a federal case in Texas.
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The defendants, Mauricio Chavez and Giorgio Benvenuto, ran an unregistered offering of cryptoassets to Latino investors in September 2022. When regulators learned of the illegal trades, The SEC executed an emergency action to stop the offer.
In the press report, SEC officials revealed that Chavez claimed to be well-versed in crypto trading and allegedly taught Latino residents how to make more money. He used Bitcoin and NFTs to depict the cryptocurrencies the victims can trade and become richer.
However, when residents come to his seminar, he will encourage them to invest in CryptoFX so that the firm will conduct digital asset and currency trading on their behalf.
But the SEC revealed that he had no training, experience or education about crypto-assets or investments. Selling himself as an advanced level trader, he gave the investors fake paperwork to complete, promising that they won’t lose their money. Chavez also never engaged in crypto trading, but instead paid off investors with other people’s money based on the Ponzi model.
He used 90% of the investors’ funds to pay off other investors, develop property under him and Benvenuto, and fund his lavish lifestyle.
On the other hand, Benvenuto drew many investors into the scheme, used some of their money personally, and sent some under the GBT Group, a company owned by him and Chavez.
According to the SEC, the duo earned $2.7 million in investor payments and used $8 million for personal purposes. It also revealed that Chavez alone spent nearly $1.5 million on cars, jewelry, a house, credit card payments, adult entertainment, etc.
The town hall warns against scams that offer solutions to victims
City Hall warned about the digital asset Ponzi scheme last week after many residents contacted authorities. In the warning, the city revealed that many CryptoFX representatives are still soliciting money from residents via WhatsApp chat.
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Therefore, the city warned citizens not to invest in crypto-related offerings, but to exercise caution and research intensively about investments. It also advised citizens to contact the officials if CryptoFX representatives ask them to send funds.
The warning also applied one side where victims can make claims for lost funds. Another the website submitting claims includes California Department of Financial Protection and Innovation platform.
Featured image from Pexels and chart from Tradingview.com
