CryptoFX exposed by SEC for operating $300M Ponzi scheme

The SEC has taken legal action against 17 individuals connected to CryptoFX, a crypto trading platform, accusing them of operating a Ponzi scheme that defrauded investors of $300 million. The platform, registered in Houston in 2020, was suspected of being a crypto-asset Ponzi scheme, leading the SEC to file an emergency action to halt its operations in September 2022. After further investigation, the SEC identified 17 individuals allegedly involved in the scheme. Gurbir Grewal, director of the SEC’s Division of Enforcement, stated that the scheme targeted crypto investors in the Latino community across multiple states and countries. The SEC alleges that the individuals misappropriated investors’ funds by making false promises of investments in cryptocurrencies and nonfungible tokens (NFTs). The SEC has requested that the court charge the individuals for violating the Securities and Exchange Act and require them to return the funds and pay civil penalties. In a separate development, the SEC has postponed its decision on approving options trading on spot Bitcoin exchange-traded funds (ETFs) until April 24.