The US DOJ (Department of Justice) has secured a 20-year prison sentence against the founder of a sprawling crypto investment scheme.
According to prosecutors, this scheme had defrauded more than 90,000 investors worldwide of over $200 million.
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DOJ Exposes and Dismantles $200 Million Bitcoin Ponzi as Founder Receives 20-Year Prison Term
In a statement released on Thursday, the DOJ confirmed that Ramil Ventura Palafox, 61, was sentenced after pleading guilty to wire fraud and money laundering charges.
Palafox was the founder, chairman, and CEO of Praetorian Group International (PGI), a multi-level marketing company that claimed to generate outsized returns through Bitcoin trading and crypto-related strategies.
According to court documents, PGI operated from December 2019 to October 2021, raising more than $201 million from investors worldwide. The company promised daily returns of 0.5% to 3%, marketed as profits from sophisticated Bitcoin arbitrage and trading activities.
In reality, investigators found PGI was not conducting trading at the scale required to generate such returns. Instead, it functioned as a classic Ponzi scheme, using funds from new investors to pay earlier participants.
Authorities said at least $30.2 million was invested in fiat currency, alongside 8,198 Bitcoin valued at approximately $171.5 million at the time of investment.
Confirmed losses reached at least $62.7 million, though prosecutors indicated the total financial harm could be significantly higher.
Lavish Lifestyle and Fabricated Profits: How Palafox Hid the Collapse Behind a Luxury Facade
To maintain the illusion of profitability, Palafox allegedly created and controlled an online investor portal that displayed fabricated account balances.
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Between 2020 and 2021, the platform consistently misrepresented investment performance. It falsely showed steady gains and reinforced investor confidence even as the scheme unraveled behind the scenes.
Court filings detail how Palafox diverted substantial amounts of investor funds to finance a lavish personal lifestyle.
According to prosecutors, he spent roughly $3 million on 20 luxury vehicles. He also spent approximately $329,000 on penthouse accommodations at a luxury hotel chain and purchased four residential properties in Las Vegas and Los Angeles worth more than $6 million.
Additional expenditures included around $3 million on designer clothing, jewelry, watches, and home furnishings from high-end retailers.
Prosecutors further alleged that Palafox transferred at least $800,000 in fiat currency and 100 Bitcoin—then valued at approximately $3.3 million—to a family member.
The scheme began to collapse in mid-2021 after PGI’s website went offline and withdrawal requests mounted. Although Palafox resigned as CEO in September 2021, authorities said he initially retained control over company accounts.
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Prosecutors described this case as one of the more significant crypto-related Ponzi schemes in recent years. The sentencing marks a decisive conclusion to a scheme that thrived on exaggerated crypto profits and global recruitment networks.
Parallels with FTX: How PGI Echoed a Larger Crypto Collapse
Despite differences in scale and sophistication, this case is similar in many ways to the FTX collapse and associated contagion. Both exploited the crypto boom, promising investors outsized, unrealistic returns:
- Palafox with daily Bitcoin gains of 0.5–3%,
- FTX through high-yield exchange products tied to Alameda Research.
Investor funds were misappropriated for lavish personal spending:
- Palafox on luxury cars, real estate, and designer goods
- SBF on Alameda’s risky bets, properties, and political donations.
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Both schemes used deceptive methods to maintain investor confidence:
- PGI with a fake portal showing steady gains
- FTX with hidden liabilities and inflated valuations.
PGI defrauded over 90,000 investors with confirmed losses exceeding $62.7 million, while FTX affected millions and billions in missing funds.
Federal prosecutions followed, with Palafox sentenced to 20 years in February 2026 and SBF to 25 years in 2024.
All these highlight a trend among bad actors in crypto while also revealing the DOJ’s ongoing crackdown on crypto-related fraud.
Source: https://beincrypto.com/bitcoin-ponzi-scheme-founder-20-year-sentence/
