The mastermind behind the $100 million crypto fraud, EmpiresX, has been sentenced to more than four years in jail by a US court. The court handed the jail sentence to the arrowhead of the platform, Joshua David Nicholas, over his role in the Ponzi scheme.
According to reports, the US Court handed Nicholas about four and a half years prison sentence for his leading role in the fraudulent crypto project. In addition, the court also slammed a further three years of supervised release on the head trader following a September guilty plea from him in his plan to commit a securities scam.
Meanwhile, the Department of Justice (DoJ) stated that the accused claimed the fraudulent platform would generate daily returns using a trading bot over the past two years. Additionally, Nicholas claimed that the bot utilized both human and artificial intelligence to guarantee a daily return.
Further investigation revealed that the trading bot was fake, with Nicholas and two of his collaborators, Emerson Pires and Flavio Goncalves, alleged to be running a Ponzi scheme. Interestingly, the system used money deposited by late investors to pay earlier investors.
The DoJ believes that records of Nicholas’s associates show that both are Brazilian nationals and have laundered funds through an off-shore-based crypto exchange. The tracking of their laundered funds was done through a blockchain analytic platform.
Also read:Available data shows that only $1 million of the investor’s funds were transferred to a crypto trading account allegedly owned by the platform. In a civil action filed by the Commodity Futures Trading Commission (CFTC) in June, most funds were either mismanaged or stolen.
Even the US Securities and Exchange Commission (SEC) has slapped a charge against the trio for allegedly using investors’ funds to rent a Lamborghini, go shopping, and engage in unnecessary spending.
Misleading Investors
Part of the statement from the DoJ shows that Nicholas and his associates have lied to investors by claiming that their fraudulent platform was registered with the securities regulator as a hedge fund. In addition, the actors confessed that they lied to investors that Nicholas was a licensed trader, contrary to what the SEC had imagined.
In response, the regulator noted that EmpiresX was never registered with the agency and that the CFTC suspended Nicholas for misappropriating customers’ money.
The Ponzi scheme ran for two years, from September 2020 to early 2022. It only folded up after its handlers could not facilitate customer withdrawal requests who sought to stop their crypto investment due to the price downtrend.
It is reported that in early 2022, Pires and Goncalves, who were Florida residents, started closing EmpiresX to jet out of the United States. The authorities believe that Pires and Goncalves are now in Brazil as the investigation continues.
The crypto space has witnessed many Ponzi schemes in recent years, with actors carting away investors’ funds to the tune of millions of dollars.
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