Multiple households in Santa Monica allege that they have been victimized by a crypto Ponzi scheme. The City has received information that over 30 local households have paid significant amounts of cash to agents of CryptoFX, LLC., a business that is the center of a federal enforcement action in Texas.
Recent information suggests that representatives of CryptoFX are continuing to communicate with local residents, primarily through the WhatsApp chat service, and actively soliciting funds. The City urges residents who are looking to put money into any crypto-related investments, to conduct research and exercise extreme caution. If asked to give money to CryptoFX representatives or its affiliates, residents should contact the agencies listed below.
In September of 2022 the Securities and Exchange Commission ("SEC") filed a complaint alleging that two individuals and the business named CryptoFX, LLC., engaged in a multi-million securities fraud targeting Latino investors in several states, including California. The SEC complaint alleges, among others, that:
- the defendants held paid classes (at "la academia") to educate and empower the Latino community to build wealth through crypto asset trading, but the classes were mere ploys to get people to give money to the defendants;
- the defendants lied about investment returns and guaranteed that investors would not bear any losses; and
- investment money was not used for crypto trading as promised, but instead used to pay fake returns to investors and diverted for the defendants' personal use.
Below is a list of resources for residents:
- California Department of Financial Protection and Innovation: The DFPI is a statewide agency that provides consumer protection in financial transactions, and regulates financial services, products, and professionals. You can file a complaint with the DFPI by clicking here.
- Haven Neighborhood Services: Haven is a community-based organization that offers free financial coaching for clients. Haven staff can help victims file claims with the court-appointed Receiver in the CryptoFX SEC case. Diana Arciniega: diana.arciniega@havenservices.org, (213) 375-4663.
- The Santa Monica Police Department, in collaboration with Familias Latinas Unidas ("FLU"), is planning an outreach event addressing fraud prevention, in Spanish and English. The program will address common financial scams, detection and prevention of financial scams, and additional tools for consumers. To learn more about this event please contact community.affairs@santamonica.gov.
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