Florida Man Pleads Guilty to Crypto Ponzi Scheme
- Crypto Ponzi schemes have soared over the last few months.
- The rise of crypto crimes has led to increased calls for crypto regulation.
- Crypto fraudsters deceive their targets with false promises of profit.
The Department of Justice announced that a Florida man entered a guilty plea in federal district court for taking part in a crypto Ponzi scheme that duped investors of almost $100 million. According to the department, Joshua David Nicholas served as the head trader for the fraudulent EmpiresX’s for almost two years, promising investors daily returns of 1% through a trading bot and his expert manual trading skills. However, Nicholas’s claims were false, and such a bot never existed. The company operated a Ponzi scheme by using new customers’ funds to pay off the old.
According to the Department of Justice, the company was never registered and made no attempts to comply with the law. The department noted,
Despite representations to the contrary, EmpiresX never registered, nor took steps to register, EmpiresX’s investment program as an offering and sale of securities with the U.S. Securities and Exchange Commission, nor did EmpiresX have a valid exemption from this registration requirement.
The authorities further noted that the bulk of the investor money was squandered by Nicholas and the EmpiresX co-founders, Emerson Sousa Pires and Flavio Mendes Goncalves. The group reportedly made payments on a second home, leased a Lamborghini, and purchased various goods from Tiffany & Co.
Nicholas eventually invested a small part of the funds in a trade but suffered huge losses. He pleaded guilty to one count of conspiracy to commit securities fraud and is now facing a maximum sentence of five years in federal prison.
However, Pires and Goncalves left for their home country of Brazil after pausing withdrawals for investors. Nonetheless, both parties were charged with wire fraud, securities fraud, and a conspiracy to launder money. The EmpiresX situation is one of the growing numbers of crypto Ponzi schemes defrauding investors of their funds.
Reacting to this story, Anthony Salisbury, a special agent, said,
This case should serve as a warning to any individuals who look to illegally capitalize on the perceived ambiguity of the crypto market to take advantage of innocent investors.
According to George L. Piro, special agent in charge of the FBI in Miami, criminals have embraced new technologies for their acts. However, the crime remains the same. George remarked theft and fraud cases are nothing new to the investment world. But, these criminals are heavily flocking to the crypto market.
The growing number of crypto frauds has led to increasing calls for regulations, especially in the US. Lawmakers in the United States are working towards releasing regulatory policies for the industry. But, so far, regulators are yet to agree on what should be considered securities and commodities.