Rising crypto fraud and AI-powered scams signal growing risks for unsuspecting investors.
In the latest crypto news, the U.S. Department of Justice (DoJ) just dropped the hammer on one of the biggest crypto scams in years.
Ramil Ventura Palafox, the 61-year-old CEO of Praetorian Group International (PGI), just got a 20-year prison sentence for running a $200 million Bitcoin Ponzi scheme that wrecked over 90,000 investors worldwide.
Palafox, a dual citizen of the United States and the Philippines, styled himself as a big-shot trader, promising investors hefty returns and marketing PGI as a high-return Bitcoin trading platform with daily gains of up to 3%.
Albeit PGI was trading BTC, it was not doing so at a scale capable of fulfilling the promised returns.
Since PGI’s actual trades were nowhere near enough to settle investors, Palafox paid early investors with money from new investors, a classic pyramid scheme. The crypto news showed that the operation collapsed when fresh cash slowed down, possibly due to market pullbacks.
Victims lost at least $62.7 million, while Palafox lived large on funds from his fraud.
According to the DOJ’s official press release, investors funneled over $201 million into PGI between 2019 and 2021. This included $30 million in fiat and 8,000+ Bitcoin.
Palafox is reported to have spent ~$3 million on 20 different luxury cars, and about $329,000 on penthouse suits. He also bought four homes in Las Vegas and Los Angeles, worth over $6 million.
Over 90,000 investors from around the globe got caught in the scheme. As the crypto scam happened just as the 2018 bear market was coming to an end, many of the investors were likely everyday folks chasing quick gains in the incoming bull market.
Virginia federal court found Palafox guilty of wire fraud, money laundering, and running a pyramid scheme. The court sentenced him to a minimum of 20 years for his crimes.
Such scams are responsible for the distrust from the non-crypto population. Such stories highlight the risky side of the crypto landscape.
Nevertheless, this latest crypto news highlights how the DOJ has been heavily involved cleaning up the crypto streets.
Even though PGI is officially out of commission, it is not the only monster out there. According to the Chainalysis 2026 Crypto Crime news report, in 2025, crypto scams received $17 billion on-chain, which is a significant jump from $12 billion reported in 2024.
According to the report, crypto scam continue to adapt, with the average scam payment rising 253% from $782 in 2024 to $2,764 in 2025. The report also cautions against the now burgeoning AI-enabled scams, which extract 4.5 times more money than traditional methods.
Here are three other massive crypto scams that burned billions since 2021:
HyperVerse (HyperFund), which lasted from 2021 to 2023, promised AI-powered returns up to 300% to its investors. After running for 2 years, it collapsed with over $1.8 billion missing. The founder vanished, and investors were left holding empty bags.
Forsage ran for three years from 2020 to 2023 and marketed itself as a “decentralized” smart contract on Ethereum and Tron. The scam pulled in over $300 million before the
Securities & Exchange Commission shut it down. Despite being shut down, promoters are still popping up around the internet, pushing it.
NovaTech FX managed to stay afloat for 2 years (2022-2024). NovaTech FX mixed crypto and forex promises of 3-10% weekly returns, and by the end, over $600 million was gone. The founders were charged, and the victims are still waiting for restitution payments.
If it promises guaranteed returns in crypto, it is probably a scam. It might also help to learn more about how the DeFi and crypto market works.
So, if any investor plans on spending in a project, they must exercise due diligence before risking their funds.
Simple things like knowing the company profile and founders, using cold storage, and not jumping into anything that sounds too good to be true may just save investors from losing their hard-earned money.
This crypto news out of the DoJ is a win for the good guys, as Palafox is locked up. Victims might see some restitution according to the official press release, while the DOJ’s move highlights the efforts in the industry to curb fraud.
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