Consent Order Bars Empires Consulting from Futures, Crypto Trading After Fraudulent Pools
On Friday, March 15, 2024, the US District Court for the Southern District of Florida issued a consent order against Empires Consulting Corp. for defrauding participants in two commodity pools known as EmpiresX Pools. The Commodity Futures Trading Commission had filed a complaint against Empires Consulting and several individuals in 2022 alleging multiple violations of the Commodity Exchange Act.
According to the consent order, Empires Consulting operated the EmpiresX Pools from around 2020 to late 2021 through meetings on social media platforms like YouTube, Telegram, and Facebook. The company solicited individuals in the US and elsewhere to trade futures, options, and other products through these two pools. Empires Consulting touted returns participants could earn but made several misrepresentations about the pools and the company’s trading activities.
Court documents state that Empires Consulting, through its president Emerson Pires and vice president Flavio Goncalves, held weekly video conferences claiming one pool traded using an automated trading bot called EX Bot. However, the company did not actually have such a proprietary trading algorithm. Empires Consulting also deceived participants about the amount of funds under management, once falsely stating it was around $85 million.
Additionally, Empires Consulting misled pool participants regarding the types of assets the funds would be invested in. In videos, an employee said the pools would not trade cryptocurrencies like Bitcoin and Ether due to the risk, but Empires Consulting actually used participant funds to trade digital assets including Bitcoin, Ether, and the stablecoin Tether.
In late 2021, an Empires Consulting employee directed some participants to delete promotional videos and the company posted about needing regulatory approval for marketing materials, though they had received no such notices from authorities. Soon after, the company restricted withdrawals citing issues with a crypto exchange. Since then, most participants have been unable to withdraw their funds from the scheme.
The consent order finds Empires Consulting violated the Commodity Exchange Act by defrauding participants through material misrepresentations. It also alleges the company failed to register as a commodity pool operator and defrauded clients and prospective clients through fraudulent acts and practices while operating commodity pools. Additionally, the order claims Empires Consulting improperly commingled pool participant funds with other assets.
As part of the order, Empires Consulting is permanently enjoined from further violations and prohibited from various activities related to futures, options, commodities, and digital assets. The company will also pay a civil monetary penalty to be determined. Two other individuals named in the CFTC complaint, Emerson Pires and Flavio Goncalves, were also indicted in 2022 in a related criminal case for securities fraud in the Southern District of Florida.
The consent order brings some resolution to the CFTC’s lawsuit against Empires Consulting over the alleged fraud involving the EmpiresX Pools and misuse of over $100 million obtained from victim participants.
Please contact BlockTribune for access to a copy of this filing.
