United States courts have just sentenced EmpiresX, one of the key figures behind the $100 million crypto "Ponzi" scheme, to over four years in jail.
Josh David Nicholas, the "head trader" of the purported crypto platform EmpiresX, will now serve a 51-month prison sentence along with three years of supervised release.
Nicholas pleaded guilty on Sept. 8 to conspiracy.
Over a two-year period, Nicholas made claims that his platform would make daily "guaranteed" returns using a trading bot that utilized "artificial and human intelligence."
As a Ponzi scheme, Nicolas and his associates, Emerson Pires and Flavio Goncalves, paid earlier investors with money from later investors. Blockchain analytics show Pires and Goncalves laundered investors' funds through a "foreign-based" crypto exchange, according to the DOJ.
Only around $1 million of investor funds were sent to EmpiresX's futures trading account, with the majority lost or misappropriated, according to the Commodity Futures Trading Commission (CFTC).
Investor money was used to "lease a Lamborghini, shop at Tiffany & Co., make a payment on a second home" according to the Securities and Exchange Commission (SEC).
EmpiresX was also registered with the SEC as a hedge fund and Nicholas was a licensed trader.
The National Futures Association suspended Nicholas' from trading because he misappropriated customer funds, according to the SEC.
As significant price declines began at the time, customers likely wanting to leave the crypto market felt they could not withdraw funds from the platform until early 2022.
In early 2022, Pires and Goncalves, who were living in Florida, allegedly began winding down EmpiresX and left the U.S. I believe they are now in Brazil.