EmpiresX Founders Fined $130M for Crypto Investment Fraud

The U.S. Commodity Futures Trading Commission (CFTC) announced that a U.S. federal court has ordered more than $130 million in penalties and restitution against the Brazilian founders of EmpiresX, an unauthorized cryptocurrency investment platform. The court ruling includes financial penalties and permanent trading bans.

Fraud Scheme Exposed

Court documents indicate that Empires Consulting operated an investment scheme under the name EmpiresX, claiming to offer high and consistent returns. The platform was advertised as using an algorithm-driven trading system to generate profits. However, the promised returns were not delivered.

Instead of investing the funds, founders Emerson Pires and Flavio Goncalves misused at least $40 million obtained from investors. The funds were used to purchase Bitcoin (BTC), Ether (ETH), and Tether (USDT). Withdrawals were restricted, and investors were shown fabricated account statements displaying non-existent profits.

Investigations further show that part of the funds was used for personal expenditures, including luxury purchases and travel. Authorities recovered approximately $22.8 million in digital assets.

Court Ruling

The court ruled that the EmpiresX founders committed multiple violations, including fraudulent misrepresentation, failure to register with the CFTC, and misappropriation of investor funds. On February 4, Judge Cecilia Altonaga of the U.S. District Court for the Southern District of Florida issued a ruling imposing financial penalties and permanent injunctions against the defendants.

The documents also state that an associate of the scheme, Joshua Nicholas, was arrested and pleaded guilty to conspiracy to commit securities fraud in September 2022. Pires and Goncalves left for Brazil after learning of the CFTC charges. In July 2022, the U.S. Department of Justice designated them as fugitives, but Brazilian law prevents their extradition to the United States.

The court ordered the defendants to jointly pay $32.1 million in disgorgement and $96.5 million in civil monetary penalties. Nicholas was also fined $289,000 in disgorgement and an additional $867,000 in civil penalties. In addition, the ruling permanently prohibits defendants from participating in any trading activities in the U.S. financial markets.