The US Securities and Exchange Commission (SEC) has been actively cracking down on crypto scams, with a recent case involving Ramil Palafox, the founder of PGI Global, who was charged with orchestrating a $198 million fraud scheme. Palafox allegedly defrauded investors by promoting PGI Global as a crypto asset and forex trading firm, promising high returns on “membership packages” and using a multi-level marketing model to attract participants.
The SEC’s complaint revealed that Palafox misappropriated over $57 million in investor funds for personal luxuries, including Lamborghinis, and used the remaining funds to sustain a Ponzi-style payout system that eventually collapsed in 2021. Laura D’Allaird, head of the SEC’s Cyber and Emerging Technologies Unit, stated that Palafox exploited investor trust with false claims of a proprietary AI-powered trading system, ultimately engaging in international securities fraud.
In response to the charges, the SEC is seeking permanent injunctions against Palafox, a ban on his future involvement in securities or crypto-related marketing schemes, and the return of misused funds with interest and civil penalties.
On the other hand, the SEC recently dropped its case against Richard Schueler, also known as Richard Heart, the founder of Hex, PulseChain, and PulseX. Heart announced the dismissal of the lawsuit, celebrating it as a victory for open-source development and free speech. The SEC had accused Heart of raising over $1 billion through unregistered securities offerings and misusing investor funds for personal expenses, but the case was ultimately dismissed in court.
Heart highlighted the potential damage that the SEC’s lawsuit could have caused to the open-source and free software industry, as the SEC attempted to sue software code itself, claiming it as an alter ego of a person. He emphasized the importance of protecting the vital industries that power the Internet and online speech.
The SEC’s actions against Palafox and Heart demonstrate the agency’s shifting strategy in enforcing crypto regulations, as it continues to navigate the evolving landscape of cryptocurrency and blockchain technology.