The US Department of Justice announced on Thursday that one of the masterminds of the cryptocurrency Ponzi scheme, EmpiresX has pled guilty. The scheme defrauded investors of around $100 million.
Joshua David Nicholas was the 'Head Trader' of the cryptocurrency scheme. He admitted in court that he and others fraudulently promoted the cryptocurrency scheme to lure victims.
He pled guilty to one count of conspiracy to commit securities fraud and is now facing a maximum prison sentence of five years. However, his sentencing date has not been scheduled yet.
A Ponzi Scheme
EmpiresX claimed to be using a proprietary trading bot that used artificial and human intelligence for maximizing profitability for investors, which was a false representation. Further, to lure investors, fraudulently 'guaranteed' returns and promoted the scheme on social media platforms.
However, in reality, EmpiresX operated as a Ponzi scheme , it paid old investors from the proceeds collected from the new investors.
The perpetrators even showed screenshots of the company’s profitable account with a well-known electronic trading platform. 12:02
However, later it surfaced that EmpiresX did not hold the trading platform accountable and the screenshots were fabricated.
They even created a fake website to show investors that they are trading with the collected proceeds. However, only $1 million of the investors' funds were sent to a futures trading account.
Additionally, the crypto scheme did not register for the offering and sale of securities in the United States, despite targeting Americans.
On top of that, the Commodity Futures Trading Commission filed a separate civil lawsuit against EmpiresX and its two masterminds, Nicholas and two Brazilian citizens, Emerson Pires and Flavio Goncalves.
However, the original CFTC complaint only measured the solicitation to be of at least $41.6 million, out of which more than $14.3 million were collected from US individuals. That complaint elaborated that the three masterminds misappropriated at least $5 million of the investors’ funds.
