The chief exec of cryptocurrency mining firm Mining Capital Coin (MCC) has been accused by the US Department of Justice (DoJ) of misleading more than 65,000 investors as part of a $62 million crypto pyramid scheme.
As detailed in a press release issued on Friday, the DoJ alleges that Luiz Capuci Jr sold so-called ‘mining packages’ he claimed would deliver returns of 1% per day from mining new cryptocurrencies.
However, according to the DoJ, Capuci actually siphoned off just over $11 million of investor funds into his own crypto wallets affording him a decadent lifestyle awash with high-powered sports cars, a luxury yacht, and fancy real estate.
He then laundered the funds through a number of foreign crypto exchanges.
Not content with billing his operation as “the biggest cryptocurrency mining operation in the world,” Capuci also managed to convince investors that MCC could leverage the power of a network of trading bots that could “do thousands of trades per second” using never-before-seen technology.
Unfortunately for them, he was actually using his bots to create more crypto for him and his co-conspirators.
Speaking about the indictment, Luis Quesada, Assistant Director of the FBI’s Criminal Investigative Division said: “Virtual currency markets are growing rapidly, and unfortunately so are cryptocurrency investment scams.”
“The FBI and our law enforcement partners are committed to investigating financial fraud wherever it occurs, including in the virtual currency space.”
Capuci faces charges of conspiracy to commit wire fraud, conspiracy to commit securities fraud, and conspiracy to commit international money laundering — a rap sheet that carries a potential 45 years behind bars.
It was all just a pyramid scheme
According to the DoJ indictment, the scam Capuci was running amounted to little more than a pyramid scheme.
It claims that he brought on board a number of promoters and affiliates tasked with shilling MCC and its investment products through ‘multi-level marketing.’
These promoters were apparently lured with the promise of high-end gifts, including iPads, Lamborghinis, Apple Watches, and even Capuci’s own Ferrari.
MCC is also copping heat from the SEC
On the same day as the charges from the DoJ, the Securities and Exchange Commission (SEC) also brought fraud charges against MCC, Capuci, his fellow founder Emerson Souza, and two other businesses run by Capuci — CPTLCoin Corp and Bitchain Exchanges.
The SEC alleges that Capuci promised returns in Bitcoin (BTC) but later made it so that all investments needed to be withdrawn in MCC’s own token called Capital Coin (CPTL).
These tokens could only be redeemed on Bitchain, a fake crypto exchange created by Capuci. However, when they tried to get their hands on their funds, they were met with apparent errors that meant they either needed to wave goodbye to their tokens or buy another MCC mining package.
“Capuci and Pires took every opportunity to extract more money from unsuspecting investors on false promises of outlandish returns and used investor funds raised from this fraudulent scheme to fund a lavish lifestyle,” said Chief of the SEC Enforcement Division’s Crypto Assets and Cyber Unit, Kristina Littman.
In April, the US District Court for the Southern District of Florida issued a restraining order against Capuci and his co-defendants and ordered that all their assets be frozen.