- EmpiresX founders fined over $130M for defrauding investors in crypto schemes..
- CFTC secures permanent ban on EmpiresX founders from U.S. financial markets.
- U.S. court orders significant penalties, but Brazilian law blocks extradition of founders.
The U.S. District Court for the Southern District of Florida has imposed a penalty of more than $130 million on the founders of EmpiresX. The court ordered financial penalties, permanent injunctions, and other legal actions against Emerson Pires, Flavio Goncalves, and their associate, Joshua Nicholas. This ruling follows a default judgment after the defendants failed to respond to the accusations.
Founders Misused $40 Million from Investors
According to court documents, EmpiresX operated a fraudulent cryptocurrency investment platform. The founders promised high returns to investors, but instead, they misused the funds. They spent the money on personal expenses, including luxury purchases and travel. They also restricted withdrawals and showed fake profits from non-existent investments.
The scheme raised at least $40 million from investors. The investigators discovered that Pires and Goncalves misused the digital currency funds to benefit themselves. The authorities recovered $22.8 million worth of digital currencies after uncovering the suspects’ fraudulent behavior.
Heavy Financial Penalties and Market Restrictions
Judge Cecilia Altonaga imposed a $32.1 million disgorgement fine and a $96.5 million civil monetary penalty on Pires and Goncalves. Nicholas had to pay two separate financial penalties amounting to $289,000 and $867,000. The court issued a permanent trading ban that prevents the defendants from ever doing business in U.S. financial markets.
The court decision highlights the serious financial consequences associated with fraudulent scheme participation. The CFTC demonstrates its dedication to cryptocurrencies financial crime investigations through such strategic actions.
Founders Flee to Brazil Amid Legal Actions
While Joshua Nicholas was arrested in 2022 and pleaded guilty to conspiracy charges, Pires and Goncalves fled to Brazil. They learned of the charges and left the U.S. before they could be apprehended. Although the U.S. authorities filed a notice to place them under fugitive status, Brazilian law prevents the extradition of its citizens.
This makes it unlikely that Pires and Goncalves will face prosecution in the U.S. anytime soon. However, the court’s ruling ensures that they face significant legal consequences, even if they are not immediately apprehended.
CFTC Remains Focused on Consumer Protection
The CFTC maintains its ongoing commitment to fight fraudulent schemes in cryptocurrency markets. Acting chair Caroline Pham revealed the agency’s decision to abandon previous enforcement approaches from the past administration. Furthermore, enforcement director Brian Young shared plans for a task force realignment to uphold public trust in the markets.
This particular case demonstrates the dangers that come from operating cryptocurrency operations without regulatory oversight. The CFTC takes action to safeguard market integrity and defend consumer rights.
