The U.S. Securities and Exchange Commission (SEC) filed a complaint against Mining Capital Coin Corp. (MCC) and its founders Luis Carlos Capuci Jr., and Emerson Souza Pires for allegedly engaging in a cryptocurrency mining fraud scheme.
The Commission also included two other entities, CPTLCoin Corp. and Bitchain Exchanges in the lawsuit. Capuci and Pires also control both entities.
In the complaint, the SEC alleged that the defendants offered and sold unregistered investment plans called mining packages to thousands of investors worldwide. Their action is a violation of the registration and antifraud provisions of the Securities Act of 1933, and the Securities Exchange Act of 1934 (Exchange Act).
SEC likens MCC to “Potemkin village”
According to the SEC, MCC and its founders, Capuci and Pires sold cryptocurrency mining packages to 65,535 investors worldwide since January 2018. They falsely promised investors guaranteed daily returns of one percent (1%)and would be paid weekly for a period of 52 weeks.
The defendants also allegedly misrepresented to investors that the weekly returns were generated from MCC’s business operations including cryptocurrency mining, foreign exchange, and trading of crypto assets and stocks. The defendants claimed using arbitrage trading and semi-automatic trading.
MCC and its founders falsely claimed that the weekly profits were the result of “profit-sharing” from their business operations.
Additionally, the SEC alleged that the defendants first promised MCC investors that their weekly returns would be in Bitcoin. However, they later required investors to withdraw their investments in MCC’s tokens called Capital Coin (CPTL).
Furthermore, MCC and its founders allegedly required investors to redeem CPTL tokens on Bitchain, a fake crypto asset trading platform created and managed by Capuci. The defendants made it difficult for investors to cash out their investments and returns.
Moreover, MCC investors seeking to redeem their investments were forced to pay another $100 transaction fee. They were also forced to either increase their initial investment by purchasing another mining package or forfeit their investment.
“MCC was a Potemkin village for the digital age. There was no mining for cryptocurrency. No trading robots. No trading. MCC might have created its own crypto asset, but it had no real value. MCC had one, and only one, source of revenues: Its unsuspecting investors,” according to the SEC in the complaint.
MCC, Capuci, and Pires profited at least $8.1 million from selling cryptocurrency mining packages to investors. They also made generated $3.2 million in initiation fees from investors.
The SEC obtained a temporary restraining order against the defendants and an order freezing their assets.
In a statement, SEC Enforcement Division, Crypto Assets and Cyber Unit Chief A. Kristina Littman said, “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…The restraining order and asset freeze helps preserve investor assets and puts a stop to the defendants’ alleged ongoing fraudulent enterprise.”
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