The bankrupt EmpiresX digital asset hedge fund has agreed to pay $34,839,951 in fines to the US SEC in compensation for allegations of investor fraud and violations of securities laws.
The settlement, which was agreed on Friday only with the corporate entity EmpiresX, imposes a payment of $32,178,397, representing profits derived from the scheme. An additional $2,661,554 in interest brings the total to $34,849,951. EmpiresX is also permanently barred from violating future securities of the type described in the SEC complaint and from buying, offering, or selling any future securities.
The court had issued a final judgment against co-defendant Nicholas on April 19, fined the trader $300,000, and barred him from attracting any new investors, receiving additional funds from other existing investors, and issuing, buying, offering, or selling any securities.
Last June, the SEC announced fraud charges against EmpiresX, co-founders Emerson Sousa Pires and Flavio Mendes Goncalves, and principal trader Joshua David Nicholas. The defendants are accused of enticing investors with false claims of one percent daily returns but instead embezzling large sums of investors money for personal use.
EmpiresX, or Empires Consulting Corp, is a Florida-based digital asset hedge fund run by the co-founders Pires and Goncalves and the platforms principal trader Nicholas. Joshua David Nicholas was reportedly given a 4 year, 3 month prison term in December of last year for committing a $100 million bitcoin scam.
However, from September 2020 to early 2022, the company operated as a Ponzi scheme that the US Department of Justice (DOJ) claims has raised around $100 million with false promises – legend of a trading bot that uses artificial intelligence to maximize returns for investors.
Instead, in a classic Ponzi scheme, EmpiresX pays earlier investors with the proceeds from later investors. The scheme was revealed in early 2022 after the platform refused to process customer withdrawals during the migration caused by the spring market downturn.