Category Archives: FinTech

SEC charges 17 individuals in $300m Crypto Ponzi scheme

The SEC has charged 17 individuals with running a $300 million Crypto Ponzi Scheme that targeted the Latino community. The company involved, CryptoFX LLC, and many of the individuals are based in Houston.

The individuals behind CryptoFX are Maurico Chavez and Giorgio Benevenuto. Chavez founded the company in 2020, while Benevenuto assisted Chavez in operating it. The SEC filed an emergency action to halt the scheme in September 2022. They appointed a Receiver over the company and the assets of Chavez and Beneventuo.

The Receiver reported that the company had raised at least $300,000 from over 40,000 predominantly Latino investors across the US. CryptoFX’s market trading generated only $2.6 million in trading profits.

The Founders

Chavez and Benevenuto are not charged in this indictment as they already settled with the SEC in 2023. They agreed to pay back their ill-gotten gains with interest, and a civil penalty. The SEC will determine the amounts later.

In the complaint against Chavez and Benevenuto, the SEC alleged that they diverted $8 million of investor funds to a real estate development company that they owned. The SEC also allege that they diverted a further $6.4 million to homebuilders and related professional companies for the purchase and development of multiple properties. In addition, Chavez is alleged to have spent $1.4 million on personal spending, including $181,996 for his stay at the luxury Post Oak Hotel.

The current Defendants

The current SEC complaint alleges that, from May 2020 to October 2022, the 17 individuals from Texas, California, Louisiana, Illinois and Florida, acted as leaders of the CryptoFX network. They solicited investors by promising returns ranging from 15% to 100%. Instead of placing investor funds into a trading program, CryptoFX and the defendants mostly used the funds to pay returns to existing investors.

CryptoFX operated a commission structure where the defendants got a 7% commission on all investments they brought in, plus 3% of all funds solicited by their first-tier investors.

Combined, the 17 defendants earned nearly $5.2 million from commissions from the scheme. Ismael Zarco Sanchez, of Conroe, earned $2.1 million, while four others earned over $400,000 each.

Sanchez is alleged to have told an investor to wire his investment of $260,000 directly to Chicago Title of Texas. Sanchez was in the process of buying a house in Conroe for $1 million.

Two of the individuals, who earned a combined $62,000 have already agreed to settle with the SEC.