Empirix founders Emerson Pires and Flavio Gonzálves face hefty fines and reparations from the US Federal Court for their fraudulent cryptocurrency scheme.
The Commodity Futures Trading Commission (CFTC) reported that a US federal court has ordered the Brazilian founders of EmpiresX, an illegal cryptocurrency investment platform, to pay more than $130 million in penalties and reparations.
The case comes as one of the many fraud cases taking place in the crypto world as the trend sees a global surge.
The CFTC obtained a court order prohibiting the defendants from trading in US financial markets, in addition to the more than $130 million in cash penalties.
How Did The Fraud Take Place?
EmpiresX founders Emerson Pires and Flavio Goncalves, together with colleague Joshua Nicholas, were subject to permanent injunctions, financial penalties, and other legal measures on February 4 by Judge Cecilia Altonaga of the US District Court for the Southern District of Florida.
Empires Consulting ran EmpiresX, a fraudulent investment scheme that deceitfully assured investors of large profits. Pires and Goncalves were accused of using fraudulent cryptocurrency ads to defraud people out of at least $40 million.
The creators misappropriated the funds by buying Bitcoin, Ether, and USDT instead of investing them as promised. They also restricted withdrawals and displayed fictitious earnings from investments that never existed.
The money was utilized by the EmpireX founders for travel and other personal costs, such as luxuries. Nevertheless, detectives were able to retrieve digital currencies worth roughly $22.8 million from them.
Crypto Frauds See Global Surge
Regrettably, the increase in cryptocurrency fraud has coincided with the rise in cryptocurrency use. Scams that target novice investors, including as phishing attacks, rug pulls, and Ponzi schemes, have increased in frequency.
The BitConnect scam, which promised large returns to investors and then crashed in 2018, is one well-known example. The PlusToken scam, which defrauded customers of almost $2 billion, is another example. Furthermore, phishing attempts deceive users into disclosing private keys or personal information by using bogus websites and fake wallets.
The growth of decentralized finance (DeFi) platforms has also led to an increase in rug pulls, in which developers depart projects and embezzle money. As cryptocurrency expands, it is imperative that regulators put protections in place against such fraudulent activity and that investors be attentive.
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