Co-founder of the EmpiresX cryptocurrency pyramid scheme gets 4 years behind bars

Joshua David Nicholas, a co-founder of the EmpiresX cryptocurrency pyramid scheme that embezzled more than $ 100 million in client funds, was sentenced to 4 years in prison in the United States. The organizers of the pyramid scheme attracted investors by positioning EmpiresX as a hedge fund and Nicholas as a licensed trader.

Joshua Nicholas pleaded guilty to fraud with user funds, admitting to promoting an investment scheme based on the Ponzi scheme model. The defendant and his accomplices, Emerson Pires and Flavio Gonçalves, sold unregistered securities and «guaranteed» investors high returns by investing in the cryptocurrency ecosystem. The offenders paid the funds received from new investors to previous investors — a standard Ponzi scheme. According to preliminary estimates, the fraudsters managed to get about $ 100 million.

The fraudsters also claimed that they had developed a trading bot «using artificial and human intelligence» that allegedly provided daily income to EmpiresX clients. However, no bot existed — only $ 1 million of the funds received were used for real crypto trading.

The EmpireX pyramid scheme operated from September 2020 to early 2022. After the cryptocurrency market crashed, many investors wanted to withdraw their funds, but the platform refused to allow them to do so. After several complaints were published, Pires and Gonçalves fled to Brazil, where they are still hiding from justice.

Earlier it was reported that the co-founders of EmpiresX face 25 to 45 years in prison. In September, law enforcement officials talked about 5 years in prison for Nicholas, but thanks to his cooperation with the investigation and his own confession, the fraudster received only 4 years in prison.