A US court has ordered more than $130 million in penalties and restitution against the Brazilian founders of EmpiresX, a fraudulent cryptocurrency investment platform. The ruling was announced by the Commodity Futures Trading Commission (CFTC).
Court Ruling and Penalties
On 4 February, Judge Cecilia Altonaga of the US District Court for the Southern District of Florida imposed permanent injunctions and financial penalties against EmpiresX founders Emerson Pires and Flavio Goncalves, along with associate Joshua Nicholas.
The case, initially filed on 30 June 2022, resulted in a default judgment after the defendants failed to respond within the given deadline. The court found them guilty of multiple violations, including fraudulent misrepresentation, failure to register with the CFTC, misappropriation of funds, and breaches of trading regulations.
The founders were fined a total of $32.1 million in disgorgement and $96.5 million in civil penalties. Nicholas, who was also implicated in the scheme, received fines of $289,000 and $867,000 for similar offenses.
False Promises and Misuse of Funds
Court documents revealed that EmpiresX falsely promised high investment returns to victims, with Pires and Goncalves securing at least $40 million through deceptive cryptocurrency advertisements. Instead of investing the funds as claimed, they misappropriated them to purchase Bitcoin (BTC), Ether (ETH), and Tether (USDT), while also limiting withdrawals and generating fake profits from non-existent investments.
CFTC vs. Empires Consulting Corp court order. Source: CFTC
Investigations found that the duo spent investor funds on luxury items and travel. However, authorities managed to recover approximately $22.8 million in digital assets.
Founders Flee to Brazil
While Nicholas was arrested and pleaded guilty to conspiracy to commit securities fraud on 8 September 2022, Pires and Goncalves fled to Brazil after learning about the charges.
In July 2022, the US Department of Justice moved to classify the pair as fugitives. However, Brazilian law prohibits the extradition of its citizens, making their return to the US unlikely.
Trading Ban and Future Enforcement
Alongside the financial penalties, the court has permanently banned the defendants from trading in US financial markets.
On 5 February, CFTC acting chair Caroline Pham announced that the agency would be scaling back its approach to regulation by enforcement, a practice that intensified under the Trump administration. Meanwhile, enforcement director Brian Young confirmed that a forthcoming task force realignment would focus on maintaining public confidence in market integrity.
