A U.S. court has ruled against the founders of EmpiresX, an investment scheme that defrauded investors of at least $40 million.
The Commodity Futures Trading Commission (CFTC) filed a lawsuit against Emerson Pires, Flavio Goncalves, Joshua Nicholas, and Empires Consulting Corp. for violating U.S. commodity trading laws. The court declared them in default after they failed to respond to the lawsuit within the required time.
Pires and Goncalves, both from Brazil, launched EmpiresX in 2020 and promised high returns through automated trading. The group used social media, video calls, and in-person meetings to convince investors to invest money into their trading pools.
They falsely claimed that an automated system, the “EX Bot,” would generate profits and that Nicholas, a U.S. citizen, would personally trade on behalf of investors. However, EmpiresX was never registered with regulatory authorities.
The defendants used deceptive tactics to mislead investors. They created a fake website that displayed false account balances and falsely claimed to be managing $85 million. They also lied about avoiding cryptocurrency trading, even though they regularly used investor funds to trade Bitcoin, Ether, and Tether.
Following an investigation by regulators into the operations of EmpiresX in late 2021, Nicholas instructed investors to delete promotional videos, falsely claiming that regulators had raised concerns about marketing materials.
Around the same time, EmpiresX began blocking investors from withdrawing their funds, blaming a supposed problem with a cryptocurrency exchange.
In reality, Pires and Goncalves were using investor money for personal expenses, spending hundreds of thousands of dollars on luxury shopping, travel, and dining instead of returning funds to investors.
The court has ordered severe penalties against the defendants. Pires and Goncalves must jointly pay a $96.5 million civil penalty, with interest accruing if they fail to pay immediately.
Nicholas must pay a separate penalty of $867,000. They must make payments through electronic transfer, money order, or certified check, and failure to comply could result in further legal action.
Recently, Robinhood halted Super Bowl betting contracts as the CFTC requested Robinhood to stop offering event derivatives contracts linked to the Super Bowl. These contracts allowed speculation on the game’s outcome, but the CFTC raised concerns about their legality under current regulations.
The CFTC has also issued a customer advisory urging investors to be cautious of scams in 2025. The agency warns against fraudulent trading platforms, relationship investment scams, and misleading social media-based investment schemes.
The advisory encourages investors to verify sources, protect their personal information, and stay informed about trading risks
Recently, the CFTC has made changes in how it enforces rules in response to fraud and manipulation. The body will reorganize its’ Division of Enforcement to strengthen efforts against fraudsters and protect market participants.
