MCC CEO Luiz Capuci Jr. did not use the investment fund to mine new cryptocurrency, instead, he diverted the funds to personal cryptocurrency wallets.
The Department of Justice (DOJ) has indicted Luiz Capuci Jr., the CEO, and co-founder of crypto mining and investment platform Mining Capital Coin (MCC), for “allegedly orchestrating a $62 million global investment fraud scheme.”
In connection with several allegedly fraudulent schemes run through MCC, the DOJ has charged Capuci with conspiracy to commit wire fraud, conspiracy to commit securities fraud, and conspiracy to commit international money laundering. He faces a maximum prison sentence of 45 years if found guilty.
According to the DOJ’s indictment, Capuci (along with unnamed co-conspirators) is accused of misleading investors about the profit-making potential of MCC mining packages and a native token called Capital Coin, which was backed by the “world’s largest cryptocurrency mining operation.”
Capuci is said to have advertised “substantial profits and guaranteed returns by using investors’ money to mine new cryptocurrency” as part of the mining packages, but allegedly failed to deliver on the promise:
“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 never-before-seen technology” capable of conducting “thousands of trades per second” and generating daily returns for investors.
“However, as with the Mining Packages, 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 diverting funds to himself and co-conspirators,” according to the DOJ indictment.
Furthermore, as part of a multi-level marketing scheme, the MCC CEO and co-founder allegedly recruited MCC promoters and affiliates. 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” in exchange for luring investors into the MCC ecosystem.
“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.”
On the same day that the DOJ announced its indictment, the SEC announced fraud charges against MCC, co-founder Emerson Pires, Capuci, and two entities controlled by Capuci, CPTLCoin Corp. (CPTLCoin) and Bitcoin Exchanges (Bitchain).
Over a year, “MCC, Capuci, and Pires sold mining packages to 65,535 investors worldwide and promised daily returns of 1%, paid weekly,” according to the SEC’s complaint.
According to the SEC, investors were initially promised Bitcoin (BTC) returns, but this was later changed to MCC’s Capital Coin (CPTL), which could only be redeemed on “a fake crypto asset trading platform Capuci created and managed” called Bitcoin.
However, when it came time to withdraw their funds, users were only given the option of purchasing another mining package or forfeiting their funds.
According to the SEC, Pires and Capuci “reached 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 based on false promises of outlandish returns and used investor funds raised from this fraudulent scheme to fund a lavish lifestyle, including the purchase of Lamborghinis, yachts, and real estate,” said A. Kristina Littman, chief of the SEC’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 and an order freezing the defendants’ assets last month.
