One of the leading figures found guilty of being behind the $100 million EmpiresX “Ponzi” scam has just been sentenced to more than four years in jail by a US court.
The sentence was handed down against Joshua David Nicholas, the “main operator” of the alleged cryptocurrency platform EmpiresX, who will now have to serve a sentence of 51 months in prison along with three years of supervised release. for his role in the fraudulent scheme.
The judgment comes after Nicholas pleaded guilty Sept. 8 to conspiracy to commit securities fraud..
According to the Department of Justice (DOJ), Over a two-year period, Nicholas claimed that the platform would earn “guaranteed” daily returns through a trading bot that used “artificial and human intelligence” to maximize returns..
In fact, the “bot” was fake, and Nicolas and his partners, Emerson Pires and Flavio Goncalves, operated a “Ponzi” scheme who paid the first investors with the money of the last. The Department of Justice alleges that blockchain analysis shows that Pires and Goncalves, both Brazilian nationals, laundered investor funds through a “foreign-based” cryptocurrency exchange.
Only about $1 million of investor funds were sent to a futures trading account for EmpiresX, and most of the funds were lost or misappropriated.according to the Commodity Futures Trading Commission (CFTC), which filed civil actions against the three in June.
At the same time, The Securities and Exchange Commission (SEC) filed fraud charges against the trio, saying investors’ money was used to “lease a Lamborghini, shop at Tiffany & Co., make a second home payment and much more.”.
Investors were also told that EmpiresX was registered with the SEC as a hedge fund and that Nicholas was a licensed trader..
The SEC said the platform was never registered with the Commission and that the National Futures Association suspended Nicholas from trading for misappropriation of client funds.
The scam ran for two years, from around September 2020 to early 2022, when it broke down, as the platform refused to allow withdrawals from customers who likely wanted to leave the cryptocurrency market. due to the significant price declines that began at that time.
Pires and Goncalves, who were residing in Florida, allegedly began winding down EmpiresX operations in early 2022 and left the United States.; they are now believed to be in Brazil.
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