Crypto enthusiasts and users are aware of the risks involved in investing in digital assets. Besides losing funds due to price crashes, investors can lose money through fraud, pump-and-dump schemes, exchange and protocol hacks, Ponzi schemeetc.
Recently, many Latino investors have been exposed to crypto Ponzi schemes resulting in the loss of funds. The City Hall warning states that up to 30 residents have fallen victim to this fraudulent operation, warning others to be careful.
Crypto Ponzi Scheme Claims Investor Funds
The Latin Times reports that up to 30 victims of the operation have alerted the authorities about their losses to the scammers. In detail, the person behind the fraud is an employee of CryptoFX LLC, a company that is currently involved in a federal case in Texas.
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The defendants, Mauricio Chavez and Giorgio Benvenuto, conducted an unregistered offering of crypto assets to Latino investors in September 2022. When regulators caught wind of the illegal transaction, The SEC took emergency action to end the sacrifice.
In a press report, SEC officials revealed that Chavez claimed to have known about crypto trading and allegedly taught Latinos how to make more money. They use Bitcoin and NFT to represent crypto assets that can be traded and become richer.
However, when people come to his seminars, he will ask them to invest in CryptoFX so that the company will do digital asset trading and foreign exchange on their behalf.
But the SEC said they have no training, experience, or education in crypto assets or investments. They sell themselves as advanced traders, provide false documents to investors, promising that they will not lose their funds. In addition, Chavez never engaged in crypto trading but paid investors with other people’s money based on the Ponzi scheme model.
He used 90% of the investors’ funds to pay off other investors, develop real estate under him and Benvenuto, and finance his lavish lifestyle.
On the other hand, Benvenuto pulled in many investors for the plan, used some personal money, and sent some in the GBT Group, a company belonging to Chavez.
According to the SEC, the duo made $2.7 million in investor payments and used $8 million for personal purposes. He also revealed that Chavez alone spent nearly $1.5 million on cars, jewelry, housing, credit card payments, adult entertainment, etc.
City Hall Announces Fight Against Fraud Providing Solutions For Victims
City Hall warned of a digital asset Ponzi scheme last week after many residents contacted authorities. In the warning, the city announced that many representatives of CryptoFX are still asking for funds from citizens through WhatsApp chats.
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Therefore, the city warns citizens not to invest in crypto-related offers but to be careful and research their investments. Also, advise citizens to contact the official if CryptoFX reps ask to send funds.
The warning is also displayed site where the victim can file claims on lost funds. apart site to submit claims including the California Department of Financial Protection and Innovation Platform.
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