Investors Betrayed by Ghost Tech: Judge Finalizes $228M Crypto Fraud Verdict

A U.S. federal judge has declared EminiFX, a cryptocurrency trading platform, to be a Ponzi scheme, ordering its founder, Eddy Alexandre, to pay $228 million in restitution to investors defrauded by the scheme. The ruling, issued by U.S. District Judge Valerie Caproni, follows a civil enforcement action by the Commodity Futures Trading Commission (CFTC) and a prior criminal conviction of Alexandre for commodities fraud. The judgment adds $15 million in disgorgement to Alexandre’s financial obligations, with restitution payments expected to offset his previous disgorgement liability [1].

EminiFX operated from September 2021 through May 2022, marketing itself as a platform offering guaranteed weekly returns of between 5% and 9.99% through an automated trading system known as the “Robo-Advisor Assisted Account.” The platform raised approximately $262 million from over 25,000 investors, many of whom were recruited through Alexandre’s church and Haitian community connections. Court documents reveal that the promised technology did not exist, and the firm generated losses in 24 of its 30 weeks of operation. Alexandre admitted in a criminal sentencing letter that the weekly performance figures he provided were fabricated [2].

The scheme functioned by funneling new investor funds to pay earlier participants, a hallmark of Ponzi schemes. Investigators found that Alexandre withdrew at least $15 million in personal expenses, including luxury vehicles and cash withdrawals. The CFTC and federal prosecutors filed parallel cases in May 2022, leading to Alexandre’s nine-year prison sentence and a previous $213 million restitution order. The latest civil ruling reinforces prior actions and underscores the scale of the fraud, which defrauded investors of over $248 million [1].

A court-appointed receiver has been working since 2022 to trace and recover funds linked to EminiFX. Earlier this year, the first distribution of recovered funds was approved and disbursed to investors. While the civil case concludes, recovery efforts remain ongoing for thousands of victims who lost money in the scheme. The CFTC’s restitution calculation was based on investor contributions minus withdrawals, with Judge Caproni emphasizing the need for full financial accountability [2].

The case highlights the risks of high-yield cryptocurrency schemes, particularly for investors with limited financial literacy. Alexandre’s fraudulent practices exploited trust within his community and the allure of automated trading using “trade secret” technology. Legal experts have emphasized the importance of investor education and rigorous verification when assessing investment opportunities, particularly those involving emerging technologies like AI and crypto. Alexandre’s conviction and the CFTC’s enforcement actions serve as a legal benchmark for future cases involving similar fraudulent practices in the crypto space [1].

Source:

[1] Federal Judge Declares EminiFX a Ponzi Scheme, Orders $228M in Restitution (https://cryptopotato.com/federal-judge-declares-eminifx-a-ponzi-scheme-orders-228m-in-restitution/)

[2] CFTC Wins Summary Judgment in $228M Crypto Ponzi Case (https://finance.yahoo.com/news/cftc-wins-summary-judgment-228m-070522917.html)