EmpiresX Founders Ordered to Pay $130M for Crypto Fraud
On February 4, 2025, the Commodity Futures Trading Commission (CFTC) announced that the U.S. District Court for the Southern District of Florida ordered the Brazilian founders of the illegal cryptocurrency platform EmpiresX to pay $130 million in fines and restitution.
The court determined that the EmpiresX founders were responsible for operating a fraudulent cryptocurrency investment platform that misled and defrauded investors.
-deceptive-crypto-ads”>EmpiresX Founders Obtained $41.6M from Investors Through Deceptive Crypto Ads
According to the CFTC announcement, two Brazilians, Emerson Pires and Flavio Goncalves, along with Florida resident Joshua Nicholas, were charged with fraud related to the EmpiresX commodity pool scheme and other violations of the Commodity Exchange Act (CEA) and CFTC regulations.
Florida Court Orders Brazilian Nationals to Pay Over $128 Million for Fraudulent Commodity Pool Scheme: https://t.co/9fD0D7660d
— CFTC (@CFTC) February 4, 2025
The CEA is a U.S. law that regulates trading in commodity futures and options markets to prevent fraud, manipulation, and excessive speculation.
The CFTC enforces these regulations, overseeing the integrity and transparency of the derivatives markets and ensuring fair trading practices.
The court decision, which stems from a complaint filed by the CFTC on June 30, 2022, requires Pires and Goncalves to pay over $32 million in disgorgement and more than $96 million in civil penalties.
Nicholas, on the other hand, faces fines of nearly $1.2 million.
Along with these financial penalties, the court permanently bans the trio from engaging in any activities related to commodities trading.
Court files revealed that the fraud began in September 2020 when the EmpiresX founders started luring people into their platform by promising high returns through a “private investment” pool or a pool supposedly managed by an automated trading bot.
They advertised the platform on the EmpiresX website and through online videos posted on social media.
The founders claimed that participants could achieve financial independence and profit daily from various financial markets, including futures, stocks, and cryptocurrency.
In reality, the EmpiresX founders were misleading investors with false claims about the platform’s profitability, and their alleged trading accounts with a large trading platform were fabricated.
At least $41.6 million was pooled from more than 12,500 investors, with the defendants retaining over $32 million in ill-gotten gains.
By November 2021, the EmpiresX founders stopped honoring withdrawal requests, signaling the collapse of the fraudulent operation.
The CFTC’s efforts to clamp down on crypto fraud are clear, but the agency also seems committed to encouraging legitimate innovation within the industry.
Just a day after the ruling, the CFTC announced plans to hold a public roundtable to refine its approach to prediction markets, an area that could impact platforms like Kalshi and Polymarket.
Acting Chairman Caroline Pham has expressed concerns about the agency’s previous overly cautious stance.
Still, with this new direction, the CFTC intends to balance regulation and encourage meaningful innovation within the crypto space.
Crypto Scams and Manipulations Begin Uptick Trajectory in 2025
While President Donald Trump’s pro-crypto stance has sparked optimism for the digital asset market, concerns over crypto scams remain unresolved.
On February 3, renowned blockchain investigator ZackXBT revealed that Coinbase saw at least $65 million stolen from customers between December 2024 and January 2025.
The report highlights a larger issue, with total estimated losses exceeding $300 million annually.
The theft was linked to a surge in social engineering scams targeting unsuspecting users through phishing emails, fake customer support calls, and fraudulent websites designed to mimic Coinbase’s interface.
Victims are tricked into transferring funds under the pretense of verifying account security. Once stolen, the assets are swiftly laundered through blockchain bridges and mixing services, making recovery nearly impossible.
Despite new milestones, including Bitcoin hitting an all-time high of $109,000, concerns about market manipulation also persist.
A recent Chainalysis report exposed billions of dollars in wash trading and pump-and-dump schemes across blockchain networks, raising alarms over the integrity of the market.
Diane Seo, a data scientist at Chainalysis, explained that wash trades involving ERC20 and BEP20 tokens account for up to $2.57 billion in trading volume on decentralized exchanges.
She noted that market manipulators artificially inflate token activity to lure investors before selling off their holdings for profit.
Some even offer wash trading, helping token creators boost trading volume to appear more legitimate.
As the crypto industry matures, it inherits bad actors from traditional finance, just as the internet once did in the real world.
Nevertheless, making clear regulations and stronger oversight are important for the industry’s long-term credibility.
Source: cryptonews.com
