Despite his promises, Pinillo had created no trading platform whatsoever, was doing no crypto trading, and simply pocketed all the money. Any payments made to his customers during the fraud were taken from newer investors, in classic Ponzi fashion.
Former pastor charged with crypto scheme in which he stole $5.9 million from his former congregants
The CFTC has filed suit against Francier Obando Pinillo, an American former pastor who targeted his former congregants and other unsophisticated investors with a crypto pyramid scheme called "Solanofi". He promised victims that his supposed automated trading system was "risk free", and that they would earn guaranteed profits as high as almost 35% compounded monthly — which he "proved" to them with an online dashboard showing faked balances. They were also encouraged to recruit friends and family, and incentivized with referral fees.
- "CFTC Charges Washington State Pastor with Fraud, Misappropriation in Multilevel Marketing Scheme Targeting Hispanic Americans", US Commodity Futures Trading Commission [archive]
SEC charges promoters of NovaTech pyramid scheme
Following a lawsuit from the New York Attorney General in June, the SEC has filed a lawsuit against the promoters of the NovaTech crypto pyramid scheme and affinity fraud. Cynthia and Eddy Petion particularly targeted victims of Haitian descent, promoting their schemes in Creole, leveraging their victims' religion, and promising them "financial freedom" and "freedom from the plantation".
The SEC's lawsuit also targets six other promoters of the NovaTech scheme, all of whom the agency says used "religious overtones" when attracting new investors. Ultimately, the scheme was revealed to be a Ponzi scheme, with new investors' money being used to pay out previous investors, as the promoters also took money for themselves.
- "SEC Charges NovaTech and its Principals and Promoters with $650 Million Crypto Fraud", US Securities and Exchange Commission [archive]
New York Attorney General sues over $1 billion NovaTech and AWS Mining crypto pyramid schemes
The New York Attorney General’s office has sued Cynthia and Eddy Petion over two allegedly fraudulent cryptocurrency pyramid schemes called AWS Mining and NovaTech. They particularly targeted victims of Haitian descent, promoting their schemes in Creole, leveraging their victims’ religion, and promising them “financial freedom” and “freedom from the plantation”.
In reality, the schemes were pyramid schemes in which investors earned crypto for recruiting others to buy in. NovaTech also used the funds from newer investors to pay out the supposed “returns” from the investment scheme, in a classic Ponzi fashion. From August 2019 – April 2023, victims deposited more than $1 billion into NovaTech. Though it was described as a trading operation, only about $26 million ever went into crypto trading.
In June 2022, the couple secretly sold their Florida house and moved to Panama, while continuing to pretend they were in the state. Speaking to another operator of the scheme, Cynthia Petion advised: “leave the country…they can’t serve you if they can’t find you lol.”
SEC files emergency action to stop CryptoFX scam
CryptoFX is a crypto-based scheme targeted specifically to Latines, promising to invest its victims' assets in cryptocurrencies and teach its customers how to trade crypto. It also reportedly functioned as a pyramid scheme, using a "referral program" to incentivize people to recruit friends, family, and people in their communities.
The United States Securities and Exchange Commission filed an emergency action to stop the fraud and freeze assets, which was granted on September 29, 2022. The SEC then filed a complaint against the company and its leaders Mauricio Chavez and Giorgio "Gio" Benvenuto. The SEC alleged CryptoFX had raised at least $12 million from 5,000 investors, which ostensibly would be put into crypto markets but instead was primarily used to "fund [Chavez's] real estate company and extravagant lifestyle".
- "SEC Halts Crypto Asset-Related Fraud Victimizing Latino Investors", United States Securities and Exchange Commission
Randi Zuckerberg tests your secondhand embarrassment tolerance with her second crypto-themed parody song
Apparently hoping to create the "rallying cry for the women of web3", Randi Zuckerberg released her second crypto-themed song "WAGMI", a parody of Twisted Sister's "We're Not Gonna Take It". Earlier that month, she had released another parody video, of Adele's "Hello". "WAGMI" is loaded with crypto in-jokes, with Zuckerberg at one point yelling "LFG! sweep the goddamn floor! we're hodling, yes we are!" The reaction on Twitter appeared to be fairly universally one of cringe, and more than a few users drew comparison to the terrible raps of alleged Bitfinex money launderer Heather "Razzlekhan" Morgan.
Partway through the song, Zuckerberg sings "carpe the crypto diem". This raises the question of whether she intentionally included a dig at her brother Mark's failed Diem cryptocurrency project (formerly Libra), or if the project was such a flop even his own sister didn't know about it. I truly can't decide which scenario would be funnier.
"1st LGBTQ+ Cryptocurrency" brings pinkwashing to crypto
Founders say they aim to help the LGBTQ+ community with a Spanish cryptocurrency project, "Maricoin". The team plans for the currency to be used for payment in a network of businesses have signed an "equality manifesto" promising to be queer-friendly. Critics of the project feel it's little more than pinkwashing, and many have criticized the name, which is based on a Spanish slur.
"Women-led" NFT project, "Fame Lady Squad", turns out to be a bunch of dudes
The "Fame Lady Squad" NFT project touted itself as a woman-designed and -developed project that would give back to women in the space, drawing support from high-profile individuals like Gary Vaynerchuk, and ultimately around $1.5 million in investments. Problem is, the three women who were supposedly running the project were a group of Russian men, accused by one of the individuals who uncovered the lie of trying to profit off American social causes. The group had a history of creating NFT projects based on false stories. One of their other projects, "Cyber City Girls Club", was intended to campaign to stop hate against Asians, and also originally purported to be run only by women (it wasn't).
Uulala and related individuals settle with SEC for a total of $543,000 in fines
The company Uulala, which aimed to provide underbanked individuals with opportunities to build credit, settled with the SEC over charges that they ran an unregistered that raised $9 million. Although they claimed to be using a "proprietary micro-credit algorithm" and proprietary database technology, the SEC said their algorithm was still under development and that they were using database technology belonging to another company. As a part of the settlement, Uulala disabled all $UULA tokens and asked crypto exchanges to disallow trading.