DOJ nabs $100m Crypto Ponzi EmpireX

Financial System GlobalIntelHub

Global Intel Hub -- Charlotte, NC -- 9/9/2022-- It seems that fraud surrounding Crypto will never end.  The idea that a new electronic asset class is confusing to the masses attracts scammers like moths to bright lights.  The United States Department of Justice announced yesterday the guilty plea in a $100 Million ponzi scheme, purporting to be some kind of Crypto trading shop:

A Florida man pleaded guilty today to conspiracy to commit securities fraud in connection with a global cryptocurrency-based Ponzi scheme that took in approximately $100 million from investors.  According to court documents, Joshua David Nicholas, 28, of Stuart, was the “Head Trader” for EmpiresX, a purported cryptocurrency platform. 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. Nicholas and his co-conspirators claimed that EmpiresX operated a trading bot that used artificial and human intelligence to maximize profitability for investors. Instead, EmpiresX operated a Ponzi scheme by paying earlier investors with money obtained from later EmpiresX investors. 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.  Nicholas pleaded guilty to one count of conspiracy to commit securities fraud and faces a maximum penalty of five years in prison. A sentencing date has not yet been scheduled. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.

Ponzi schemes are bad for markets, and for those who aren't professionals it's often hard to tell the difference between a scammer and the real deal.  Of course, the scammers have the advantage, because they can advertise 10% per month rates of return, with 'no losses' because, it is, a scam.  There are no doubt tons of other scams out there right now, but how to tell if an investment is real?  Here's a few signs that what you are looking at is a scam (these are red flags, failing any of these is not evidence that it's a scam):

  • The individuals or entity involved is not registered with authorities (even the hedge funds are all SEC exempt advisors or exempt pools)
  • High rates of return, with virtually no losses
  • Limited access to evidence
  • Promises of 'guaranteed' returns
  • Sounds 'too good to be true'
  • Often, scams are accompanied by stories, dramatic stories about the founder
  • High referral / affiliate payouts
  • Aggressive sales tactics
  • Flashy websites with no disclaimers
  • No physical presence in the US (IP is at a cafe in Vietnam, for example)

The US is a bit of a closed system, it's virtually impossible in today's day and age to run a scam inside the US and not get caught.  Everything is recorded.  So for this reason some would be scammers would operate from places where there is not such a surveillance state, i.e. Vietnam, Indonesia, or perhaps South America.

Stay safe out there -

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