The Securities and Exchange Commission has slapped fraud charges and an emergency asset freeze to shut down a $600m Ponzi scheme on the threshold of collapse.

The US watchdog’s emergency closure of the fund has secured that victims can recoup more of their money and potentially avoid devastating losses, said SEC.

The SEC accused that online marketer Paul Burks of Lexington, North Carolina and his company Rex Venture Group have raised money from more than one million Internet customers across the US and managed them through the website, which they started in January 2011.

Pertaining to the fraud being committed by the firm with investors, SEC filed a case in federal court in Charlotte, North Carolina, in which the regulator claimed that the offenders offered several ways to earn money through the ZeekRewards program, two of which were mixed up with purchasing of securities in the form of investment contracts.

The investigator found that these securities offerings were not registered with the SEC as required under the federal securities laws.

Paul Burks offered the investors for up to 50% of the company’s daily net profits through a profit sharing system in which they deposit rewards points that they can use for cash payouts, said SEC.

The website deceitfully expressed the false impression that the company was extremely profitable which, in reality, the payouts to investors bore no relation to the company’s net profits.

Most of ZeekRewards’ total revenues and the "net profits" paid to investors have been comprised of funds received from new investors in classic Ponzi scheme fashion, according to SEC.

SEC’s Division of Enforcement associate director Stephen Cohen said the obligations to investors drastically exceed the company’s cash on hand, which is why the SEC needs to step in quickly, salvage whatever funds remain and ensure an orderly and fair payout to investors.

"ZeekRewards misused the power of the Internet and lured investors by making them believe they were getting an opportunity to cash in on the next big thing. In reality, their cash was just going to the earlier investor," Cohen said.

Burks has agreed to settle the SEC’s charges against him without admitting or denying the charges, and agreed to cooperate with a court-appointed receiver.

As per the SEC’s complaint, ZeekRewards has paid out nearly $375m to investors to date and holds nearly $225m in investor funds in 15 foreign and domestic financial institutions. Burks has also agreed to relinquish his interest in the company and its assets plus pay a $4m fine.