A US court fined the Brazilian creators of EmpiresX more than $130 million for running a fraudulent cryptocurrency scam that deceived investors.
The Commodity Futures Trading Commission (CFTC) reported that a US federal court has ordered the Brazilian founders of EmpiresX, an illegal cryptocurrency investment platform, to pay more than $130 million in penalties and reparations.
EmpiresX founders Emerson Pires and Flavio Goncalves and colleague Joshua Nicholas were subject to permanent injunctions, monetary fines, and other legal measures on February 4 by Judge Cecilia Altonaga of the US District Court for the Southern District of Florida.
When the defendants did not reply to the charges by the deadline, the case, first filed on June 30, 2022, ended in a default judgment.
Unrealistic return on investment promises
The court records state that Empires Consulting ran EmpiresX, a fraudulent investment scheme that deceitfully promised investors large profits. Pires and Goncalves were accused of using fraudulent cryptocurrency ads to defraud people out of at least $40 million.
The founders misappropriated the funds to buy Bitcoin (BTC $98,377), Ether (ETH $2,833), and USD (USD $1.00) instead of investing them as promised. They also restricted withdrawals and displayed fictitious earnings from investments that never existed.
The EmpireX founders utilized the money for travel and other personal costs, such as luxuries. Nevertheless, detectives retrieved digital currencies worth roughly $22.8 million from them.
The executives of EmpiresX were found guilty by the court of several offenses, including trading and regulatory violations, false misrepresentation and deception, failure to register with the CFTC, and misuse of funds.
The founding pair allegedly fled to Brazil after learning of the CFTC allegations, even though Nicholas was arrested and entered a guilty plea to conspiracy to conduct securities fraud on September 8, 2022.
The US Department of Justice submitted a notification to place the founders of EmpiresX under fugitive status in July 2022. However, it is improbable that they will be arrested and extradited to the US because Brazilian law forbids the extradition of its people.
The CFTC obtains significant fines on EmpireX and a permanent trading prohibition.
The founders received a combined civil monetary penalty of $96.5 million and a disgorgement fine of $32.1 million. For the same infractions, Nicholas received penalties of $289,000 and $867,000, respectively.
The CFTC obtained a court order prohibiting the defendants from trading in US financial markets, in addition to the more than $130 million in cash penalties.
Caroline Pham, the interim chair of the CFTC, declared on February 5 that the agency would discontinue its enforcement-based regulation strategy during the Trump administration.
However, a task force reconfiguration that is coming up will help “maintain public confidence in the integrity of our markets,” according to enforcement director Brian Young.
