The US Department of Justice (DOJ) recently disclosed that the head of a global crypto investment fraud scheme of around $100 million has pleaded guilty.
They could now be facing five years of prison time because of the charges against them. The DOJ stated that they had misappropriated huge sums of money taken from investors.
They had been used for shopping at Tiffany & Co., leasing a Lamborghini, making payments on a second home and plenty more activities.
Guilty plea
On Thursday, the Department of Justice (DOJ) revealed that Joshua David Nicholas had pled guilty for the role of ‘head trader, which he had played in a global crypto Ponzi scheme.
The scheme in question had accumulated around $100 million from investors and the 28 year old man from Florida admitted that he, along with others, were responsible for making misrepresentations.
They had promised investors guaranteed returns via a crypto platform called Empiresx and claimed that it had a trading bot using human and artificial intelligence for offering maximum profits to investors.
According to the DOJ, Empiresx had not been anything more than a Ponzi scheme that paid early investors with the money obtained from previous investors.
The charges
Nicholas was also charged by the US Securities and Exchange Commission (SEC), along with other founders of Empiresx named Flavio Goncalves and Emerson Pires from Brazil.
The charges had been filed against them in June for violation of the anti-fraud and registration provisions of the Securities Exchange Act of 1934 and Securities Act of 1933.
The securities regulator also noted that Empiresx had not contacted the SEC to register its investment program.
It said that they had advertised a fake trading bot and there had been significant losses due to Nicholas’ trading.
Moreover, the defendants had only transferred a small amount of money given by investors to the brokerage account of Empiresx.
Instead of doing so, the defendants had opted to misappropriate the funds they had accumulated from investors and used them for different purposes like paying for a second home, leasing a car, shopping and more.
More details
All three men had been indicted by the Justice Department back in June and they had been charged with one count of conspiracy to commit securities fraud and one count of conspiracy to commit wire fraud.
Gonclaves and Pires had also been charged with conspiracy to commit money laundering internationally.
The indictment disclosed that the two had used a foreign-based crypto exchange for laundering the funds of investors.
The Justice Department further noted that Nicholas had pled guilty to the charges of securities fraud and this means that he could be facing a prison sentence of five years.
No other information was revealed about the other two defendants. However, this shows that the DOJ is quite serious about going after crypto criminals.
The number of Ponzi schemes is on the rise and quick action is needed to bring them down.