Fresh off a recent renaming, the SEC Enforcement Division Crypto Assets and Cyber Unit charged two ‘Bitcoin miners’ and their entities on Friday with fraud in one of the most allegedly brazen crypto scams we’ve seen. In its first post-rebranding litigation, the sexy new enforcement unit’s complaint alleges a litany of bad acts that further raises the bar for cryptoscam brazenness in the alleged perpetuation of a wide-ranging fraud. It also highlights how easily investors can be fleeced by slick talkers saying the right crypto buzzwords. Just like in everything else in this life, if a crypto deal is too good to be true, RUN.
This one’s got all the greatest hits: Thousands of phantom bitcoin mining machines, Range Rover and Merc and luxury giveaways, a currency trading platform allegedly invented from thin air, a pyramid scheme built inside it, a couple of dual (Brazil/US) citizens at the helm, and of course, like almost every securities fraud case – at least one Ferrari. Sidebar: What is it about Ferraris and Lamborghinis that is so attractive to federal investigators, and why do alleged fraudsters keep buying them? (If you are aware of any studies correlating supercar ownership with litigation by government agencies, please let us know!)
Regardless of what the defendants were peddling, the case is an alleged straight-up fraud affecting over 65,000 investors around the world. The Commission alleged that Luiz Carlos Capuci, Jr. and Emerson Souza Pires – both dual Brazilian/US citizens – sold ‘mining packages’ for millions of dollars with promises to investors of 1% weekly returns on mining ops and insane crypto arbitrage profits. The pair required redemption of investor funds through one crypto exchange, which was nothing but a website pretending to be an exchange, controlled by the defendants – and there were no allegedly no redemptions, no bitcoin miners, and no exchange at all. It was all – allegedly – a fiction dreamed up by Capuci and Pires.
Both defendants bought Lamborghinis with the alleged proceeds, and one of them also picked up a Ferrari and a yacht. The government seems to think both defendants made it to Brazil, a place most think of as an extradition partner of the U.S. – what many don’t know is the Brazilian government typically denies extradition requests when their own citizen is the subject. U.S. Asset freeze and temporary injunctions have already issued, and the US Attorney for the S.D. Florida and FBI’s Miami office have been hard at work on the criminal side of the case, even if their targets are hiding in a field of açaí berries for the foreseeable future (indictment here).
DISCLAIMERS: The allegations made by the government and cited in this article are allegations only. You should not consider them facts unless and until they are proven in court or otherwise. All criminal defendants are innocent until proven guilty. Many fine people own Ferraris and Lamborghinis, and we make no statement by this article about the reputation of any individual based on their ownership of the aforementioned sportscars. Nothing in this article constitutes legal advice about any matter, and no attorney-client relationship is formed by your consumption of the information herein. You rely on any information herein at your sole risk, which you assume by clicking on, and reading the information on this website.
Feinstein Law, P.C. is a Washington State professional corporation with attorneys licensed in California, Florida, Michigan, and Washington. Contact us for a free consultation about your securities law matter today, or learn more about our firm’s experience here.
Title shout out to the 80s’ band with perhaps the most influence on the early lives of both our Founder and our Senior Counsel.
