CEO of ‘Textbook Ponzi’ Pleads Guilty in $200M Bitcoin Fraud Case

In brief

Prosecutors said Palafox raised $201M by promising daily returns of up to 3%.
At least $62.7M in losses were recorded, with funds spent on luxury goods and property.
The real issue is fraudulent behavior, not the underlying technology, one observer said.

The chief executive of Praetorian Group International, Ramil Ventura Palafox, pleaded guilty in Virginia this week to wire fraud and money laundering.

Palafox, 60, a dual U.S. and Philippine citizen, led the company as chairman, chief executive, and chief promoter. He oversaw a $200 million Bitcoin Ponzi scheme that prosecutors said had defrauded over 90,000 investors, with total losses of at least $62 million, according to a statement from the Justice Department.

The scheme promised daily returns of 0.5% to 3% through a Bitcoin trading program that never operated at scale. Instead, funds from new participants were recycled to pay earlier investors or spent on personal luxuries.

From December 2019 to October 2021, investors put in at least $201 million, including more than $30 million in fiat and more than 8,100 Bitcoin valued at $171 million at the time.

Palafox also spent around $3 million on 20 luxury cars, more than $6 million on four homes in Las Vegas and Los Angeles, and hundreds of thousands on penthouse suites and designer goods from brands like Rolex, Cartier, and Gucci.

PGI’s online portal showed investors fraudulent account balances and fictitious gains, reinforcing the appearance of safety. Prosecutors said the platform was central to maintaining the illusion until withdrawals mounted and the scheme unraveled.

“Praetorian is a textbook Ponzi scheme MLM structure with promises of unrealistic returns through “AI Bitcoin arbitrage,” and payouts funded by new investors,” Dan Dadybayo, research and strategy lead at Unstoppable Wallet, told Decrypt.

Here, Dadybayo is referring to multi-level marketing (MLM), a sales model where participants earn money both by selling products or services and by recruiting new members into the scheme.

Praetorian’s scheme “fits the same pattern as BitConnect, PlusToken, and OneCoin,” he noted.

Yet unlike larger-scale cases such as those of FTX and Mt. Gox, the Praetorian case “won’t leave a lasting mark,” he said. “It may create more skepticism around the term “arbitrage,” but for regulated players it’s almost a marketing win: they can point to their compliance spending as a safeguard.”

Such schemes keep emerging “because greed is universal, and regulators don’t have the resources to chase everyone,” he added.

Palafox is scheduled for sentencing on February 3, 2026, and faces up to 40 years in prison. He has agreed to restitution of $62.7 million, though actual sentences are typically less than the statutory maximum.

“The lesson for regulators is that the real issue is fraudulent behavior, not the underlying technology,” Dadybayo opined. “Instead of ever-expanding KYC/AML, a better approach is financial literacy, red-flag awareness, and stronger international coordination.”