- PGI Global promised 3% daily returns using fake AI trading to lure 90,000 investors.
- Palafox used investor funds to fund a lavish lifestyle of luxury cars and designer goods.
- SEC’s first crypto case under Paul Atkins targets fraud despite his crypto-friendly stance.
The SEC has just closed one of its most high-profile fraud cases this year, after charging Ramil Palafox, the founder of PGI Global with organizing an international Ponzi scheme. Details of this case show that Palafox defrauded around 90,000 investors out of nearly $200 million. The case stands as one of the agency’s most high-profile prosecutions under its new chair Paul Atkins, and shows the ongoing risks in such a volatile market like crypto.
False Promises and Lambos
Palafox was said to have raised around $198 million between January 2020 to October 2021 through his company, PGI Global. PGI Global claimed to be running an AI-powered crypto and forex platform, promising investors daily returns as high as 3%. The company’s marketing was aggressive and flashy, claiming that it could generate profits even though Bitcoin’s price was in the middle of a bear market at the time.
However, behind the presentations and grand promises, regulators say that there was no AI-powered platform and no actual trading at all. Instead, the SEC alleges that Palafox ran a Ponzi operation, using funds from new investors to pay off earlier ones. The remainder of the money (over $57 million) was then spent on luxury goods and personal indulgences like sports cars and designer products.
The Lavish Lifestyle
According to court documents, Palafox thoroughly enjoyed the fruits of his fraud, and bought everything from Lamborghinis, Ferraris, multiple Teslas and several Porsches. He even splurged the money on designer bags, jewelry, watches and high-end real estate. In total, authorities reclaimed about 17 vehicles, along with more than $1 million in cash.
The court documents also show that PGI Global didn’t just rely on online advertising to draw in investors. He even used a multilevel marketing (MLM) model to expand his reach, offering referral bonuses to investors who brought in friends and family. These tactics are even more common in global hotspots like Dubai and Las Vegas, where Palafox presented promises of “guaranteed passive income” to crowds who were eager to cash in on the so-called crypto boom.
However, instead of buying into legitimate investment products, persecutors claim that participants were buying into a pyramid scheme that was cleverly disguised as financial freedom.
First Case Under New SEC Chair
This case is the first crypto-related enforcement action under the SEC’s newly appointed chair, Paul Atkins, who took office on April 22. Notably, Atkins has a reputation for being more favorable toward the crypto industry compared to his predecessor, making this crackdown on fraud particularly significant.
Though Paul Atkins is viewed as more favorable toward crypto, this case demonstrates he draws a hard line at deception. The SEC’s action against PGI Global’s Ramil Palafox signals zero tolerance for fraud, regardless of the industry.
Aside from the SEC’s civil suit, Ramil Palafox is also facing criminal proceedings led by federal prosecutors in Virginia. He’s been hit with multiple felony charges, including wire fraud, money laundering, and conducting illegal financial operations—emphasizing the serious nature and extensive reach of the alleged crypto fraud.
The SEC is now seeking a permanent ban against Palafox from marketing securities or crypto assets in the future. Overall as the investigation continues, more details may emerge about the full scale of the operation, and what legal consequences might follow.
