Key Takeaways
- • The SEC settled with EmpiresX, a Florida-based digital asset hedge fund, which agreed to pay $34,849,951 in total, comprising $32,178,397 in disgorgement and $2,661,554 in interest.
- • The settlement was agreed with the EmpiresX corporate entity only; the company is permanently enjoined from future securities violations and barred from purchasing, offering, or selling any security.
- • EmpiresX operated as a Ponzi scheme from September 2020 until early 2022, which the DOJ said took in approximately $100 million from investors under false claims of a trading bot and one percent daily profits.
- • Co-founders Emerson Sousa Pires and Flavio Mendes Goncalves remain fugitives outside the United States, while head trader Joshua David Nicholas received a $300,000 fine and a solicitation ban after pleading guilty.
Summary
The U.S. Securities and Exchange Commission has settled its case against EmpiresX, also known as Empires Consulting Corp, a digital asset hedge fund based in Florida. According to CoinGeek, the defunct company agreed to pay $34,849,951 in total, including $32,178,397 in disgorgement representing profits gained from the scheme and $2,661,554 in interest. The settlement, agreed with the corporate entity only, also permanently enjoins EmpiresX from future securities violations of the kind described in the SEC's complaint and permanently bars it from purchasing, offering, or selling any security. Headlines from Blockchain Enterprise News and Law360 describe the outcome as a nearly $35 million settlement.
The SEC first announced fraud charges against EmpiresX and its co-founders Pires and Goncalves, along with head trader Nicholas, in June of the prior year. The regulator alleged the defendants lured investors with false claims of one percent daily profits while misappropriating investor funds for personal use, and charged violations of the registration and anti-fraud provisions of the Securities Act of 1933 and the Securities Exchange Act of 1934. The SEC sought injunctions, disgorgement, civil penalties, and officer and director bars against Pires and Goncalves.
A court previously entered a final judgment against Nicholas on April 19, imposing a $300,000 fine and prohibiting him from soliciting new investors, accepting additional funds from existing investors, and issuing or trading securities. The U.S. Department of Justice has said the scheme, which ran from September 2020 until early 2022, took in approximately $100 million. The scheme unravelled when the platform halted customer withdrawals during a market downturn. The DOJ charged the three individuals with conspiracy to commit international money laundering and wire fraud. Nicholas was arrested in September and pleaded guilty; his sentencing has not been scheduled and he faces a maximum of five years in prison. Pires and Goncalves fled to Brazil and remain at large.
The SEC first announced fraud charges against EmpiresX and its co-founders Pires and Goncalves, along with head trader Nicholas, in June of the prior year. The regulator alleged the defendants lured investors with false claims of one percent daily profits while misappropriating investor funds for personal use, and charged violations of the registration and anti-fraud provisions of the Securities Act of 1933 and the Securities Exchange Act of 1934. The SEC sought injunctions, disgorgement, civil penalties, and officer and director bars against Pires and Goncalves.
A court previously entered a final judgment against Nicholas on April 19, imposing a $300,000 fine and prohibiting him from soliciting new investors, accepting additional funds from existing investors, and issuing or trading securities. The U.S. Department of Justice has said the scheme, which ran from September 2020 until early 2022, took in approximately $100 million. The scheme unravelled when the platform halted customer withdrawals during a market downturn. The DOJ charged the three individuals with conspiracy to commit international money laundering and wire fraud. Nicholas was arrested in September and pleaded guilty; his sentencing has not been scheduled and he faces a maximum of five years in prison. Pires and Goncalves fled to Brazil and remain at large.
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