4 charged in US over digital asset Ponzi scheme targeting Latin American communities

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The United States Securities and Exchange Commission (SEC) charged four persons involved in the alleged defrauding hundreds of individuals in a virtual currency Ponzi scheme that targeted the Latin American community.

Francisley Valdevino Da Silva, Juan Antonio Tacuri Fajardo, Ramon Perez Arias, and Jose Ramiro Coronado Reyes were indicted for their roles in creating and promoting Forcount Trader Systems Inc. The court document revealed that the defendants misled investors by claiming to give individuals “guaranteed returns” on their investments.

The investments involved buying memberships in Forcount Trader Systems, which purportedly allowed them to have a share in the firm’s mining and virtual currency trading business. Investors were lured in by the opportunity to earn rewards from a referral program, a ploy that the SEC says was designed to keep the Ponzi scheme running.

Investors lost over $8.4 million in the scheme, and the public disclosure revealed that the accused diverted funds to purchase luxury items, homes, and expensive cars. The SEC is seeking a permanent ban on the defendants from participating in “multi-level marketing or crypto asset offerings” and “disgorgement of ill-gotten gains.”

“As the complaint alleges, Da Silva, Tacuri, Perez, and Coronado deceived investors, most of whom were members of Spanish-speaking communities, with false promises of high returns on crypto-asset related investments,” Thomas P. Smith, Regional Director of the SEC’s New York Regional Office, said.

“Protecting investors from fraudulent pyramid schemes where promoters pitch high returns and complex commission structures is part of the SEC’s mission to make markets fair and open to all,” Smith added.

The scourge of digital asset fraud

In the last 12 months, the SEC has brought enforcement actions against over 30 bad actors using virtual currencies to defraud the public. The use of Ponzi schemes and outright wire fraud has been on the rise in the U.S. as the commission continues to grapple with the issuance and sale of unregistered securities to the public.

The Department of Justice (DoJ) and the Federal Bureau of Investigation (FBI) have issued a string of public advisory warnings against romance scams like pig butchering involving digital assets, Bitcoin ATM fraud, and the use of malware to steal virtual currencies.

“These scams typically involve scenarios that seem ‘too good to be true’—offering large monetary returns for a short-term, small investment,” the FBI’s warned. “The reality is that scammers steal the investment money for personal use and utilize the complexities of cryptocurrency to hide the true destination of the stolen funds.”

Watch: The BSV Global Blockchain Convention panel, Law & Order: Regulatory Compliance for Blockchain & Digital Assets