The Securities and Exchange Commission (SEC) of the United States has ordered the emergency termination of an ongoing fraudulent cryptocurrency sale aimed at the country’s Latino minority.
According to an SEC filing issued Monday, CryptoFX, a Texas-based business operated by Mauricio Chavez and Giorgio Benvenuto, both of Houston, reportedly used the attractiveness and novelty of crypto assets to solicit money from naïve investors, promising drastically outsized profits on their investment.
Despite having no financial or cryptocurrency expertise, background, or training, Chavez has been offering paid workshops with the apparent aim of educating and encouraging the Latino community to earn riches through crypto asset trading.
According to the lawsuit filed in the United States District Court for the Southern District of Texas, these seminars, which have been held since 2020, were just conduits for asking investors to donate their money to CryptoFX, with the business employing a referral system to recruit new investors.
Chavez is also accused of supplying investors with fake paperwork that, among other things, exaggerated his crypto experience and assured them that they would not suffer any losses.
According to the SEC, CryptoFX eventually raised more than $12 million from over 5,000 investors. CryptoFX co-founders spent around $2.7 million on phony returns to some investors in order to boost their credibility, while fraudulently diverting over $8 million for their personal purposes.
Rather than using the money to achieve the stated goal of profiting from cryptocurrency trading, Chavez used more than 90% of the funds to pay fake returns to investors and support his lavish lifestyle, which included cars, jewelry, adult entertainment, a house purchased in his wife’s name, and the purchase and development of real estate that he and Benvenuto controlled.
Benvenuto is accused of luring a significant investment into the plan and transferring the cash to himself and CBT Group, LLC, a firm he co-owned with Chavez.
The filing accuses the defendants of breaking federal securities laws, with the SEC seeking permanent injunctive remedies, civil fines, and the return of ill-gotten earnings with interest, as well as prohibiting Chavez and Benvenuto from serving as officers or directors of any public business.
As CoinCu reported, the SEC and the Ontario Securities Commission (OSC) have both brought concurrent fraud charges against Arbitrade and Cryptobonix, as well as their executives.
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