Department of Justice Indicts Crypto CEO for Alleged $62M Fraud Scheme
The CEO of mining and investment platform Mining Capital Coin (MCC) Luiz Capuci Jr. has been indicted for allegedly orchestrating a $62 million fraud that affected thousands of investors.
According to a press release from the U.S. Department of Justice (DoJ) on Friday, Capuci promised to use investments to mine new cryptocurrency but instead diverted funds to wallets under his control.
Capuci is also said to have fraudulently marketed MCC’s “Trading Bots,” claiming that they were able to perform “thousands of trades per second” and generate profit for investors.
Instead, the DoJ said, Capuci again diverted funds to himself and his co-conspirators.
The indictment further alleges that Capuci operated a kind of pyramid scheme, promising gifts to a network of promoters if they successfully recruited new investors. The rewards on offer are said to have included iPads, Apple Watches, and even Capuci’s own personal Ferrari.
Florida-based Capuci faces a maximum of 45 years in prison if convicted of all counts against him. He is facing charges of wire fraud, securities fraud, and international money laundering.
“Cryptocurrency-based fraud undermines financial markets worldwide as bad actors defraud investors and limits the ability of legitimate entrepreneurs to innovate within this emerging space,” said Assistant Attorney General Kenneth A. Polite, Jr. of the DoJ’s Criminal Division.
“The department is committed to following the money — whether physical or digital — to expose criminal schemes, hold these fraudsters accountable, and protect investors,” he added.
Authorities flag crypto CEO in April
According to a U.S. Securities and Exchange Commission (SEC) complaint filed last month, Capuci and his co-founder Emerson Souza Pires sold mining packages to more than 65,000 investors with a promise of daily returns of 1%, paid weekly.
The scheme had been in operation since at least January 2018.
Initially promised that their returns would be in Bitcoin, investors later found that they would be required to withdraw funds in the form of Capital Coin, MCC’s native token.
When they tried to liquidate these assets before their one-year memberships expired, however, they were met with errors and forced to either buy more mining packages or forfeit investments.
With the money raised through the scheme, Capuci and Pires funded their own “lavish lifestyle,” according to the SEC., purchasing Lamborghinis, yachts, and real estate.
In April, a Florida judge issued a temporary restraining order against Capuci and his alleged co-conspirators, and an order freezing their assets.Source