Per the US Department of Justice, a Florida man pleaded guilty on Thursday to being involved in a global Crypto Ponzi scheme. Via the same, approximately $100 million was stolen from investors.
Notably, Joshua David Nicholas was the “head trader” of EmpiresX, a “purported” crypto trading and investment platform that launched in late 2020. Nicholas and his co-conspirators claimed that EmpiresX operated a trading bot that used artificial and human intelligence to maximize profitability for investors.
Nevertheless, the bot did not exist. Instead, per the SEC, Nicholas’ manual trading “resulted in significant losses.” EmpiresX operated a Ponzi scheme wherein investors were paid money obtained from later EmpiresX investors. The rest of the money was used to “lease a Lamborghini, shop at Tiffany & Co., make a payment on a second home, and more.” Notably, the commission had filed civil fraud charges against the group in June.
Per the Department of Justice,
“Nicholas admitted that he and others fraudulently promoted EmpiresX by making numerous misrepresentations regarding, among other things, a purported proprietary trading bot and fraudulent “guaranteed” returns to investors and prospective investors in the company.”
“In addition, despite representations to the contrary, EmpiresX never registered, nor took steps to register, EmpiresX’s investment program as an offering and sale of securities with the U.S. Securities and Exchange Commission, nor did EmpiresX have a valid exemption from this registration requirement.”
Consequences of the Crypto Fraud
Nicholas pleaded guilty to one count of conspiracy to commit securities fraud. Per the Department of Justice, he could face a maximum penalty of five years in prison. However, a sentencing date remains unknown. A federal district court judge will determine the sentence after considering the US Sentencing Guidelines and other factors.
Notably, the FBI Miami Field Office and HSI’s Miami Field Office are investigating the case. The Department of Justice has encouraged all targeted investors of the EmpiresX scheme to identify themselves as potential victims. They also advise these investors to submit a victim impact statement.
This is not the first Ponzi scheme news that has spread in recent times. Last month, the SEC charged eleven people for their association in the creation of a $300 million crypto Ponzi scheme. As stated by the SEC, the charged individuals included the founders of a scheme called Forsage. These founders were suspected to be residents of Russia, Indonesia, and the Republic of Georgia.