The U.S. federal
court from Florida has ordered three individuals to pay more than $128 million
in penalties for orchestrating a fraudulent commodity trading scheme that
ensnared over 12,500 investors through a platform called EmpiresX.
U.S. Court Orders $128
Million Penalty in Major Crypto Trading Scheme
Brazilian
nationals Emerson Pires and Flavio Goncalves, along with Florida resident
Joshua Nicholas, must pay disgorgement and civil penalties for violating the
Commodity Exchange Act, according to the
default judgment from the U.S. District Court for the Southern District of
Florida.
The court
ordered Pires and Goncalves to jointly pay $32 million in disgorgement and $96
million in civil penalties. Nicholas faces separate penalties of $289,000 in
disgorgement and $867,000 in civil monetary penalties.
“Nicholas
showed pool participants an account page he identified as EmpiresX’s profitable
account with a large, well-known electronic trading platform, when in fact
EmpiresX had no account with that platform, and defendants created a fake
website that mimicked the platform’s website to mislead participants into
thinking that EmpiresX was actually trading their funds,” the Commodity Futures
Trading Commission (CFTC) explained in a press release published yesterday
(Tuesday).
Long-Running Deception
The scheme,
which operated from September 2020, involved fraudulent solicitation of
individuals to trade commodity futures and options through the EmpiresX
platform. The defendants collected at least $41.6 million from investors, with
Pires and Goncalves pocketing over $32 million in ill-gotten gains.
By November
2021, the operation began to unravel as the defendants stopped processing
withdrawal requests from participants. The court’s order permanently bans all
three individuals from trading in CFTC-regulated markets and from registering
with the commission.
DoJ and SEC
The case
has drawn attention from multiple regulatory bodies. Nicholas previously
pleaded guilty to conspiracy to commit securities fraud in a parallel criminal
case, while the Securities and Exchange Commission secured a separate default
judgment against Pires and Goncalves in June 2023.
In 2022, the
Department of Justice announced that Nicholas pleaded guilty to conspiracy
to commit securities fraud related to a global cryptocurrency-based Ponzi
scheme that defrauded investors of approximately $100 million.
Last year, the
CFTC secured over $17.1 billion in penalties, restitution, and
disgorgement. This record amount includes $2.6 billion in civil monetary
penalties and $14.5 billion in disgorgement and restitution, reflecting an
increased focus on enforcement across both traditional and emerging markets.
The U.S. federal
court from Florida has ordered three individuals to pay more than $128 million
in penalties for orchestrating a fraudulent commodity trading scheme that
ensnared over 12,500 investors through a platform called EmpiresX.
U.S. Court Orders $128
Million Penalty in Major Crypto Trading Scheme
Brazilian
nationals Emerson Pires and Flavio Goncalves, along with Florida resident
Joshua Nicholas, must pay disgorgement and civil penalties for violating the
Commodity Exchange Act, according to the
default judgment from the U.S. District Court for the Southern District of
Florida.
The court
ordered Pires and Goncalves to jointly pay $32 million in disgorgement and $96
million in civil penalties. Nicholas faces separate penalties of $289,000 in
disgorgement and $867,000 in civil monetary penalties.
“Nicholas
showed pool participants an account page he identified as EmpiresX’s profitable
account with a large, well-known electronic trading platform, when in fact
EmpiresX had no account with that platform, and defendants created a fake
website that mimicked the platform’s website to mislead participants into
thinking that EmpiresX was actually trading their funds,” the Commodity Futures
Trading Commission (CFTC) explained in a press release published yesterday
(Tuesday).
Long-Running Deception
The scheme,
which operated from September 2020, involved fraudulent solicitation of
individuals to trade commodity futures and options through the EmpiresX
platform. The defendants collected at least $41.6 million from investors, with
Pires and Goncalves pocketing over $32 million in ill-gotten gains.
By November
2021, the operation began to unravel as the defendants stopped processing
withdrawal requests from participants. The court’s order permanently bans all
three individuals from trading in CFTC-regulated markets and from registering
with the commission.
DoJ and SEC
The case
has drawn attention from multiple regulatory bodies. Nicholas previously
pleaded guilty to conspiracy to commit securities fraud in a parallel criminal
case, while the Securities and Exchange Commission secured a separate default
judgment against Pires and Goncalves in June 2023.
In 2022, the
Department of Justice announced that Nicholas pleaded guilty to conspiracy
to commit securities fraud related to a global cryptocurrency-based Ponzi
scheme that defrauded investors of approximately $100 million.
Last year, the
CFTC secured over $17.1 billion in penalties, restitution, and
disgorgement. This record amount includes $2.6 billion in civil monetary
penalties and $14.5 billion in disgorgement and restitution, reflecting an
increased focus on enforcement across both traditional and emerging markets.
This post is originally published on FINANCEMAGNATES.
