On Friday, the U.S. Department of Justice (DOJ) indicted the CEO of Mining Capital Coin (MCC) for allegedly scheming a $62 million global investment fraud.
According to the indictment, Luiz Capuci Jr., 44, of Port St. Lucie, Florida, the CEO and founder of MCC, misled investors about MCC’s cryptocurrency mining and investment program, under which investors could invest in MCC by purchasing “Mining Packages.”
Under the program, Capuci and his co-conspirators promoted Mining Capital Coin’s purported international network of crypto mining machines as “being able to generate substantial profits” and guaranteed returns by using investors’ money to mine new crypto.
The indictment continues to state that Capuci also touted MCC’s own crypto, Capital Coin, as a purported DAO that was “stabilized by revenue from the biggest crypto mining operation in the world.” The DOJ further alleges that not only did that not come to fruition, Capuci instead, operated a fraudulent investment scheme and diverted the funds to cryptocurrency wallets under his control.
“Cryptocurrency-based fraud undermines financial markets worldwide as bad actors defraud investors and limits the ability of legitimate entrepreneurs to innovate within this emerging space,” said Assistant Attorney General Kenneth A. Polite, Jr. of the Justice Department’s Criminal Division. “The department is committed to following the money — whether physical or digital — to expose criminal schemes, hold these fraudsters accountable, and protect investors.”
Mining Capital falsely marketed ‘Trading Bots’
Another allegation by the DOJ explains that Capuci fraudently marketed MCC’s purported “Trading Bots” as an additional investment mechanism for investors to invest in the crypto market. He claimed that MCC joined with “top software developers in Asia, Russia, and the U.S. to create an improved version of Trading Bot[s] that [were] tested with new technology never seen before.”
Similar to how he promoted the Mining Packages, Capuci allegedly operated a similar investment fraud scheme with the Trading Bots, instead diverting the funds to himself and co-conspirators.
“Virtual currency markets are growing rapidly, and unfortunately so are crypto currency investment scams,” said Assistant Director Luis Quesada of the FBI’s Criminal Investigative Division. “The FBI and our law enforcement partners are committed to investigating financial fraud wherever it occurs, including in the virtual currency space.”
In the indictment, the DOJ charged Capuci with conspiracy to commit wire fraud, conspiracy to commit securities fraud, and conspiracy to commit international money laundering. If found guilty, the indictment charges can result in 45 years in prison.
“This office is committed to protecting consumers from unscrupulous fraudsters seeking to capitalize on the relative novelty of digital currency,” said U.S. Attorney Juan Antonio Gonzalez for the Southern District of Florida.
Crypto crimes to hit a new high in 2022?
Chainalysis had found in its 2022 Report that cryptocurrency-based crimes had hit a record high in 2021. The year’s figure substantiates the claim as illicit addresses received $14 billion, up from $7.8 billion in 2020.
And since the start of the current year, alleged crypto frauds have been on the watchdog’s radar.
In January, the SEC accused an ICO issuer and founder for “defrauding Investors” by materially false and misleading statements, carrying an unregistered offering, and diverting funds to gold mines in South Africa without investor disclosure.
In February, the DOJ also announced that it had arrested two individuals on money laundering allegations that related to stolen crypto back from the 2016 Bitfinex hack. Notably, there has been both civil and criminal proceedings in crypto-based lawsuits.
On May 5, the U.S. Federal Court ordered the three co-founders of the crypto exchange BitMEX to pay $10 million each as a penalty under civil action. In this case, the Commodity Futures Trading Commission (CFTC) had accused Arthur Hayes, Benjamin Delo, and Samuel Reed of illegal conduct.
Meanwhile, the development also follows former CEO Arthur Hayes plea of no jail-time for the allegations.
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