Head Trader Of EmpiresX Admits $100 Million Fraud Scheme
An alleged Ponzi scam that allegedly raised $100 million from investors was admitted to by the head trader of the cryptocurrency exchange EmpiresX, who is based in Florida.
The Department of Justice (DOJ) announced Thursday that 28-year-old David Nicholas was guilty of promoting a company-run trading bot with accomplices and making the claim that it combined artificial and human intelligence to maximize gains for investors.
Authorities claim that instead of offering a valuable service, the defendants paid out rewards to early investors using funds obtained from later investors. The Securities and Exchange Commission (SEC) required EmpiresX to register its investment program as an offering, but the company never did so and was not excluded from doing so, according to the DOJ.
Nicholas pleaded guilty to one count of conspiracy to conduct securities fraud. The maximum sentence for him is five years in prison.
Following a June indictment, Nicholas and the company’s owners Emerson Pires and Flavio Goncalves were accused by DOJ investigators of conspiring to commit wire fraud and securities fraud. The latter two were additionally accused of conspiring to engage in global money laundering.
The SEC charged all three people on the same day as the DOJ’s indictment, claiming that they defrauded investors by making false claims of 1% daily earnings and misappropriating investor funds for personal use.
Pires and Goncalves, both Brazilian nationals, have allegedly fled to their home country.
Nicholas’s sentencing has not yet been scheduled. The controversy about which cryptocurrencies, and consequently which related firms, are securities today envelops the whole sector.
SEC Chair Gary Gensler stated on Thursday that he would support the growing consensus that the Commodity Futures Trading Commission should manage cryptocurrencies like Bitcoin rather than the SEC. Gensler refers to these tokens as non-security tokens. However, he claimed that the bulk of cryptocurrency tokens are securities and should fall within his purview.
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