The Security and Exchange Commission (SEC) has recently charged Jonathan Palafox, the founder of PGI Global. He is accused of operating a purportedly cryptocurrency and forex trading fraud that defrauded investors. Phase 1 of the scheme ran from January 2020 until October 2021. It purportedly used the money from newer investors to make phony returns and referral bonuses to older investors. According to the SEC, when the investments lost money, Palafox misappropriated millions for his own personal use.
The SEC's complaint states that Palafox attracted investors with promises of guaranteed profits through crypto asset and foreign exchange trading. Palafox misled investors by spending their money on himself instead of engaging in actual trading as he claimed. He reportedly purchased extravagant items—luxury cars, wristwatches and homes for himself and family members. When the scheme imploded in late 2021, at least 60,000 retail investors were left holding the bag, suffering heavy losses.
"Palafox used the guise of innovation to lure investors into lining his pockets with millions of dollars while leaving many victims empty-handed," - Laura D’Allaird, Chief of the Commission’s new Cyber and Emerging Technologies Unit
The scheme promised to pay each member who referred others a percentage of whatever new investors deposited — multi-level-marketing-style referral incentives — widening its net and reeling in even more victims. The SEC's investigation revealed that Palafox falsely represented the profitability and success of PGI Global's trading strategies.
"As alleged in our complaint, Palafox attracted investors with the allure of guaranteed profits from sophisticated crypto asset and foreign exchange trading, but instead of trading, Palafox bought himself and his family cars, watches, and homes using millions of dollars of investor funds," - Scott Thompson, associate director of the SEC’s Philadelphia Regional Office.
The SEC is seeking injunctive relief, disgorgement of his ill-gotten gains, and civil penalties against Palafox. The case is further demonstration of the SEC’s relentless crusade against fraud occurring in the cryptocurrency and digital asset arena.
