“Capuci operated a fraudulent investment scheme and did not use investors’ funds to mine new cryptocurrency, as promised, but instead diverted the funds to cryptocurrency wallets under his control,” the DOJ stated.
The CEO and co-founder of crypto mining and investment platform Mining Capital Coin (MCC) Luiz Capuci Jr. has been indicted by the Department of Justice (DOJ) for “allegedly orchestrating a $62 million global investment fraud scheme.”
The DOJ is charging Capuci with conspiracy to commit wire fraud, conspiracy to commit securities fraud, and conspiracy to commit international money laundering in relation to several allegedly fraudulent schemes that were run via MCC. If found guilty, he faces a maximum prison sentence of 45 years.
According to the DOJ’s indictment, Capuci (alongside unnamed co-conspirators) is accused of misleading investors over the profit-bearing potential of MCC mining packages and a native token dubbed Capital Coin that was backed by the “biggest cryptocurrency mining operation in the world.”
As part of the mining packages, Capuci is said to have touted “substantial profits and guaranteed returns by using investors’ money to mine new cryptocurrency” but allegedly failed to deliver on the bargain:
“As alleged in the indictment, however, Capuci operated a fraudulent investment scheme and did not use investors’ funds to mine new cryptocurrency, as promised, but instead diverted the funds to cryptocurrency wallets under his control.”
Capuci is also accused of marketing dubious MCC trading bots “with new technology never seen before” that could conduct “thousands of trades per second “ and generate daily returns for investors.
“As he did with the Mining Packages, however, Capuci allegedly operated an investment fraud scheme with the Trading Bots and was not, as he promised, using MCC Trading Bots to generate income for investors, but instead was diverting the funds to himself and co-conspirators,” the DOJ indictment reads.
Additionally, the MCC CEO and co-founder allegedly recruited MCC promoters and affiliates as part of a multi-level marketing scheme. In return for luring investors into the MCC ecosystem, Capuci is said to have promised anything from “Apple watches and iPads to luxury vehicles such as a Lamborghini, Porsche” and even his own personal Ferrari.
“Capuci further concealed the location and control of the fraud proceeds obtained from investors by laundering the funds internationally through various foreign-based cryptocurrency exchanges.”
The DOJ’s indictment was also announced on the same day that the U.S. Securities and Exchange Commission (SEC) outlined fraud charges against MCC, co-founder Emerson Pires, Capuci, and two entities controlled by Capuci in CPTLCoin Corp. (CPTLCoin) and Bitchain Exchanges (Bitchain).
According to the SEC’s complaint, “MCC, Capuci, and Pires sold mining packages to 65,535 investors worldwide and promised daily returns of 1 percent, paid weekly” over the course of a year.
The SEC alleged that investors were initially promised returns in Bitcoin (BTC), however this was subsequently changed to MCC’s Capital Coin (CPTL), which could only be redeemed on “a fake crypto asset trading platform Capuci created and managed” called Bitchain.
However, when it came time for users to withdraw their funds, they were only able to purchase another mining package or forfeit their funds.
Related: New crypto litigation tracker highlights 300 cases from SafeMoon to Pepe the Frog
The SEC alleges that Pires and Capuci “netted at least $8.1 million from the sale of the mining packages and $3.2 million in initiation fees.”
“As the complaint alleges, 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, including purchasing Lamborghinis, yachts, and real estate,” said A. Kristina Littman, chief of the SEC enforcement division’s Crypto Assets and Cyber Unit.
The SEC also stated that the District Court for the Southern District of Florida issued a temporary restraining order against the defendants last month and an order to freeze their assets.
