US Accuses 17 Additional Individuals in $300 Million Crypto Pyramid Scheme Targeting About 40,000 Latino Investors

A nationwide pyramid scheme targeting Latino investors, which has claimed thousands of victims in the United States, has probably involved more actors than initially expected. The Securities and Exchange Commission announced on Thursday that charges have been brought against an additional 17 individuals involved in the case, in addition to the initial two, for their roles in the scam facilitated through the company CryptoFX.

The document released by the SEC indicates that the company tricked over 40,000 people, mostly Latinos in the U.S., into lending money, promising big profits from cryptocurrency investments. They ended up raising over $300 million predominantly in cash, according to the investigation conducted by the bureau.

CryptoFX operated in the U.S. from May 2020 to September 2022, when the Securities and Exchange Commission filed an emergency action to stop the allegedly fraudulent, unregistered crypto investment company.

According to the document added last week into the demand, the company conducted a typical pyramid scheme. "CryptoFX sold investment contracts in which it promised to trade investor funds in the crypto asset and foreign exchange market," the SEC explains.

"However CryptoFX used substantially all investor money to make Ponzi payments, pay commissions to salespeople in a multi-level marketing scheme, and for personal purchases for CryptoFX executives and others, including some Defendants", it follows.

The aftermath proved to be catastrophic for numerous Latino investors, including Iliana Calles, a young Latina in her twenties who relied on CryptoFX with her life savings. As a result, as she shared with Houston Chronicle, she found herself juggling three jobs and resorting to selling her clothes to navigate the absence of her financial safety net and the expenses arising from her mother's recent cancer diagnosis.

"They knew how to manipulate people. They knew what groups to go after, and it worked," Calles said in the cited article regarding salespeople working for this company, which was headquartered in Houston, Texas.

Immigrant-led civil rights organizations and numerous victims began sharing their stories publicly until, in September 2022, the SEC filed a complaint against the company and its two controllers, Mauricio Chavez and Giorgio Benvenuto.

However, the new complaint filed by the SEC has now brought attention to the involvement of another group of individuals in the scam.

They were called "Leaders", and their job was to offer and sold CryptoFX's investment contracts to, collectively, thousands of investors of Leaders' locations across the United States, including Houston, Chicago, New Orleans, and Los Angeles.

"As Leaders, all Defendants engaged in unregistered offers and sales of CryptoFX investments and acted as unregistered brokers, earning commissions for CryptoFX investments they sold, as well as commissions and sometimes bonuses for the sales of investments sold by other salespeople in their downline," the document describes.

These leaders promised investors returns ranging from 15% to 100%. However, instead of investing these funds into a trading program, they used the money to pay returns to existing investors, as stated in the document.

"We allege that CryptoFX was a $300 million Ponzi scheme that targeted Latino investors with promises of financial freedom and life-altering wealth from 'risk free' and 'guaranteed' crypto and foreign exchange investments," said Gurbir S. Grewal, Director of the SEC's Division of Enforcement, in a statement.

"In the end, the only thing that CryptoFX guaranteed was a trail of thousands upon thousands of victims stretching across ten states and two foreign countries. A scheme of that size requires lots of participants, and as today's action demonstrates, we will pursue charges against not just the principal architects of these massive schemes, but all those who further their fraud by unlawfully soliciting victims."

The SEC's complaint, filed in U.S. District Court for the Southern District of Texas, further alleges that two of the "Leaders," spouses Gabriel and Dulce Ochoa, continued to solicit investments after the court issued orders to halt the CryptoFX scheme in September 2022, and Gabriel Ochoa instructed two investors to rescind their complaints to the SEC for them to recover their investments. Another defendant, Maria Saravia, allegedly told investors that the SEC's lawsuit was fake.

*If you are an investor in CryptoFX and/or have information related to the CryptoFX scheme and you wish to contact the SEC staff, please reach out to CFXvictims@sec.gov or contact the court-appointed receiver in the SEC's ongoing action against CryptoFX, Chavez, and Benvenuto, at https://cryptofxreceiver.com, (713) 546-5653, or receivership@shb.com.