SEC Halts Crypto Ponzi Operation Targeting Latino Investors

Ruholamin Haqshanas

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Ruholamin Haqshanas

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Ruholamin Haqshanas is a contributing crypto writer for CryptoNews. He is a crypto and finance journalist with over four years of experience. Ruholamin has been featured in several high-profile crypto...

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June 26, 2023

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The U.S. Securities and Exchange Commission (SEC) has filed an emergency action to stop an ongoing crypto Ponzi scheme targeting Latino investors. 

According to an SEC press release, the scheme was being operated by Mauricio Chavez and Giorgio Benvenuto through CryptoFX – a company Chavez founded and controlled. 

Details of the case revealed in the SEC complaint allege that Chavez pioneered the scheme in 2020 when he began holding paid classes “for the ostensible purpose of educating and empowering the Latino community to build wealth through crypto asset trading.” 

However, he had no background, education, or training in investments or crypto assets. The classes and seminars were only a conduit for soliciting the “unsophisticated investors” to give their money to the Texas-based CryptoFX to purportedly use in trading foreign exchange and crypto. 

For his part, Benvenuto allegedly solicited a large investor into the scheme and helped divert funds from the scheme through CBT Group, a company he controls with Chavez. The scheme raised over $12 million from around 5000 investors through this means. 

Chavez and Benvenuto proceeded to use more than 90% of the funds to pay fake returns to investors, support a lavish lifestyle, and purchase and develop real estate. The SEC alleges that the duo made approximately $2.7 million in Ponzi payments while diverting almost $8 million for their use, including nearly $1.5 million that Chavez spent on cars, credit card payments, jewelry, adult entertainment, and a house in his wife’s name. 

SEC bearing down hard on crypto Ponzi schemes 

The SEC is accusing the defendants of several charges including violations of the antifraud provisions of the Securities Act of 1933 and the Securities Exchange Act.

The SEC is seeking permanent injunctive relief, civil penalties, and the return of ill-gotten gains with interest, as well as barring Chavez and Benvenuto from serving as officers or directors of any public company.

The press release adds that the U.S. District Court for the Southern District of Texas has issued an order freezing the assets of the defendants and also granted other emergency relief. 

The case is only the latest bust the SEC has made in its redoubled efforts to end fraud in the crypto space and provide regulation for the market. Back in August, the securities market watchdog brought charges against 11 individuals involved in operating and promoting the $300 million Forsage crypto Ponzi scheme, as reported by Reuters.