A US court has fined the Brazilian founders of EmpiresX more than $130 million for running a fraudulent cryptocurrency scheme that misled investors. The Commodity Futures Trading Commission (CFTC) announced the ruling after the court found them guilty of operating an illegal investment platform.
CFTC vs. EmpiresX Consulting Corp court order. Source: CFTCFederal Court Issues Massive Penalty Against Brazilian Crypto Scammers
On Feb. 4, Judge Cecilia Altonaga of the US District Court for the Southern District of Florida ruled against EmpiresX founders Emerson Pires and Flavio Goncalves, along with their associate Joshua Nicholas. The court imposed permanent bans, financial penalties, and other legal measures.
The CFTC filed the case on June 30, 2022. The court delivered a default judgment after the defendants failed to respond to the accusations within the required deadline.
EmpiresX Promised Big Returns but Stole $40 Million from Investors
EmpiresX was marketed as a profitable investment platform under its parent company, Empires Consulting. According to court records, Pires and Goncalves promised investors high returns but misused at least $40 million collected from victims.
Instead of making real investments, the founders used the funds to buy Bitcoin (BTC), Ethereum (ETH), and Tether (USDT). They also restricted withdrawals and falsely claimed to be generating profits from non-existent investments.
Investigators discovered that the founders spent part of the money on luxury purchases and travel. However, investigators managed to recover $22.8 million in digital currencies.
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One Associate Jailed, But Key Suspects Fled to Brazil to Escape Arrest
The court ruled that the EmpiresX founders violated multiple laws, including fraud, misrepresentation, failure to register with the CFTC, and misuse of funds.
Joshua Nicholas was arrested in 2022 and pleaded guilty to conspiracy to commit securities fraud. However, Pires and Goncalves fled to Brazil after learning about the CFTC charges.
In July 2022, the US Department of Justice attempted to classify them as fugitives. However, Brazilian law prohibits the extradition of its citizens. This means the two are unlikely to be arrested and sent back to the US.
CFTC Imposes Permanent Trading Ban On EmpiresX
The court ordered the EmpiresX founders to pay $32.1 million in disgorgement and an additional $96.5 million as a civil penalty. Nicholas was fined a total of $1.15 million for his role in the scheme.
The CFTC also banned them from trading in US financial markets permanently.
On Feb. 5, CFTC acting chair Caroline Pham stated that the agency would be adjusting its enforcement strategies after regulatory changes made during the Trump administration. Meanwhile, enforcement director Brian Young assured the public that a new task force would help strengthen market integrity and protect investors.
The post US Court Slaps EmpiresX Founders with $130M Fine for Crypto Fraud first appeared on Coinchapter.
The post US Court Slaps EmpiresX Founders with $130M Fine for Crypto Fraud appeared first on Coinchapter.
