A U.S. federal court has imposed over $130 million in fines and restitution against the Brazilian founders of EmpiresX, a fraudulent cryptocurrency investment scheme that deceived investors with false promises of high returns. The Commodity Futures Trading Commission (CFTC) announced the ruling on February 4.
Court Issues Default Judgment Against EmpiresX Executives
Judge Cecilia Altonaga of the U.S. District Court for the Southern District of Florida issued a default judgment against EmpiresX founders Emerson Pires and Flavio Goncalves, along with their associate Joshua Nicholas, after they failed to respond to the allegations. The ruling includes permanent injunctions, financial penalties, and trading bans.
The case, initially filed on June 30, 2022, found that EmpiresX misled investors, falsely advertising lucrative returns while misusing funds for personal expenses and purchasing Bitcoin and Ethereum.
EmpiresX Fraud: False Promises and Misused Funds
Court documents reveal that Empires Consulting, the entity behind EmpiresX, lured investors by promising guaranteed profits. However, instead of investing the $40 million collected from victims, the founders restricted withdrawals, fabricated profits, and misappropriated the funds.
Investigators managed to recover approximately $22.8 million in digital assets, but much of the stolen money had already been spent on luxury items and travel. The court found the defendants guilty of multiple offenses, including:
- Fraudulent misrepresentation and deception
- Failure to register with the CFTC
- Misappropriation of funds
- Violation of U.S. trading regulations
Legal Consequences and Extradition Challenges
While Nicholas was arrested and pleaded guilty to conspiracy to commit securities fraud on September 8, 2022, Pires and Goncalves fled to Brazil after learning about the CFTC charges. In July 2022, the U.S. Department of Justice attempted to classify them as fugitives. However, Brazil’s legal system prohibits the extradition of its citizens, making their return to the U.S. unlikely.
Massive Fines and Permanent Trading Ban
The court ordered Pires and Goncalves to pay $32.1 million in disgorgement and $96.5 million in civil penalties. Nicholas was fined $289,000 and an additional $867,000 for his role in the scheme.
Beyond the financial penalties, the CFTC secured a permanent ban preventing all three from participating in U.S. financial markets.
Regulatory Changes Following the Case
Following the ruling, CFTC Acting Chair Caroline Pham announced on February 5 that the agency would shift away from its previous “regulation by enforcement” approach. Meanwhile, CFTC Enforcement Director Brian Young stated that a forthcoming task force realignment would focus on maintaining public trust in financial markets.
