EmpiresX founders face $130M fine for crypto fraud

A U.S. federal court has imposed over $130 million in fines and restitution on the Brazilian founders of EmpiresX, an illegal cryptocurrency investment platform, for defrauding investors.

The Commodity Futures Trading Commission (CFTC) announced the ruling, highlighting the agency's commitment to combating cryptocurrency fraud.

Judge Cecilia Altonaga of the U.S. District Court for the Southern District of Florida issued a permanent injunction and financial penalties against EmpiresX founders Emerson Pires, Flavio Goncalves, and their associate Joshua Nicholas on February 4.

The case, initially filed on June 30, 2022, resulted in a default judgment because the defendants did not respond to the charges by the deadline.

According to court documents, Empires Consulting operated EmpiresX as a fraudulent investment scheme, promising high returns to investors.

Pires and Goncalves are accused of obtaining at least $40 million from victims through deceptive cryptocurrency advertisements.

Instead of investing the funds as promised, the founders misused the money to purchase Bitcoin and Ethereum while restricting withdrawals and displaying fictitious profits.

The EmpiresX founders used the funds for personal expenses, including luxury purchases and travel.

Despite these actions, investigators recovered approximately $22.8 million in digital assets.

The court found the EmpiresX executives guilty of multiple violations, including fraudulent misrepresentation, failure to register with the CFTC, misappropriation of funds, and violation of trading regulations.

While Nicholas was arrested and pleaded guilty to conspiracy to commit securities fraud on Sept. 8, 2022, Pires and Goncalves reportedly fled to Brazil after learning about the CFTC charges.

The founders were jointly fined $32.1 million for disgorgement and $96.5 million as a civil monetary penalty.

Nicholas was fined $289,000 and $867,000, respectively, for the same offenses.

In addition to the financial penalties exceeding $130 million, the CFTC secured a court order banning the defendants from trading in U.S. financial markets.

According to ChainCatcher news, Pires and Goncalves are accused of obtaining at least $40 million from victims through deceptive cryptocurrency advertisements.

The CFTC has defined EmpiresX as an illegal cryptocurrency investment platform.