Luiz Capuci Jr. – the CEO of Mining Capital Coin – has been indicted by the United States Justice Department for allegedly engaging in a global crypto-based Ponzi scheme that made off with more than $60 million.
Luiz Capuci Indicted for Crypto Ponzi Scheme
In a press release, assistant attorney general Kenneth A. Polite, Jr. of the Justice Department’s criminal division explained:
“Cryptocurrency-based fraud undermines financial markets worldwide as bad actors defraud investors and limit the ability of legitimate entrepreneurs to innovate within this emerging space. The department is committed to following the money — whether physical or digital — to expose criminal schemes, hold these fraudsters accountable, and protect investors.
It is alleged by representatives of the Justice Department that Capuci – who hails from Port St. Lucie in Florida – misled investors by selling what he referred to as “mining packages” that promised many substantial returns on new crypto units. It is believed that Capuci may have sold said packages to as many as 65,000 individual investors beginning in January of 2018.
While many of these investors were promised as much as one percent returns for each year they stayed with their packages, Capuci instead diverted all investor funds to his own crypto wallets. All the money was used for personal and lavish expenses including a yacht, real estate, and several Lamborghinis.
U.S. attorney Juan Antonio Gonzalez for the Southern District of Florida explained:
This office is committed to protecting consumers from unscrupulous fraudsters seeking to capitalize on the relative novelty of digital currency. As with any emerging market, those who invest in cryptocurrency must beware of profit-making opportunities that appear too good to be true.
Along with the mining packages, Capuci reportedly released what he called “Capital Coin,” which was the official token of his company. However, it looks like the coin never existed, and this was instead another fraudulent attempt to gain trust from investors and steal their funds.
There was also the purported establishment of trading bots for the company that were able to produce thousands of trades per second and that could lead to daily returns. These also appear to be fake. Assistant director Luis Quesada of the Federal Bureau of Investigation’s (FBI’s) 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.
Taking Down Illicit Actors
HSI Miami special agent in charge Anthony Salisbury also threw his two cents in, commenting:
This case should serve as a warning to any individuals who look to illegally capitalize on the perceived ambiguity of the emerging crypto market to take advantage of innocent investors. HSI will continue to work with our partners to pursue anyone who utilizes these types of schemes to victimize would-be customers.