Court orders $228M restitution in EminiFX crypto Ponzi case

EminiFX and its founder, Eddy Alexandre, have been ordered to pay $228.5 million in restitution after a federal judge ruled in favour of the CFTC’s fraud case against him.

On Tuesday, Judge Valerie Caproni of the Southern District of New York ruled against Alexandre, ordering him to repay more than 25,000 investors in what regulators condemned as a “brazen Ponzi scheme.”

The order followed the Commodity Futures Trading Commission’s enforcement action, which sought restitution and disgorgement based on losses that investors suffered after contributing to Alexandre’s scheme.

EminiFX and Alexandre to pay $228 million

In her ruling, Judge Caproni noted that Alexandre had opposed the CFTC’s motion but failed to provide credible evidence to counter the claims of fraud. 

The court set restitution at $228.5 million, calculated on investor contributions minus withdrawals, and added $15 million in disgorgement. 

However, the disgorgement amount will be offset by restitution, meaning Alexandre’s repayment burden centres on making victims whole to the extent possible.

The ruling reinforces the court’s earlier finding that Alexandre misled thousands of people by promising guaranteed returns of at least 5% a week through EminiFX, a crypto and forex trading platform. 

Caproni described his conduct as a deliberate attempt to exploit investor trust, echoing prosecutors’ characterisation of the scheme as calculated and deceitful.

What’s next for victims?

With the restitution order now in place, the next step for the case is enforcement.

The CFTC will oversee the restitution process, ensuring funds are collected and distributed to victims. 

As of press time, how much investors ultimately recover remains uncertain, as much of the capital Alexandre raised was lost through mismanagement or diverted for personal use.

Still, the ruling establishes a legal framework for victims to reclaim some of their funds, supplementing the nine-year prison sentence Alexandre is already serving.

How did EminiFX scam victims?

Alexandre’s downfall traces back to his promotion of EminiFX between September 2021 and May 2022.

He has been accused of luring tens of thousands of investors with promises of passive income through a “secret technology” that supposedly automated crypto and forex trading. 

He went as far as telling investors their money would double within five months, backing the claim with fake account dashboards that displayed weekly gains that never existed.

However, behind the façade, Alexandre invested only a portion of the funds and lost millions on unsuccessful trades. 

It was later found out that he had siphoned nearly $15 million into his personal account and spent over $150,000 on luxury vehicles, including a BMW and payments toward a Mercedes-Benz.

Alexandre was arrested and charged with commodities fraud in May of 2022, to which he pleaded not guilty at first.

However, by February 2023, Alexandre had changed his plea, and the court handed him a nine-year federal prison sentence for defrauding thousands of investors.

The EminiFX case is the second major crypto Ponzi ruling in US courts this month.

Earlier in Seattle, Sergei Potapenko and Ivan Turõgin, the Estonian founders of HashFlare, received sentences of time served after pleading guilty to conspiracy to commit wire fraud. 

The pair had defrauded over 400,000 people through a sham cryptocurrency mining operation that ran from 2015 to 2019 and funnelled more than $577 million in contracts.

Judge Robert Lasnik ordered Potapenko and Turõgin to forfeit more than $450 million in assets, including cryptocurrency, real estate, vehicles, and mining equipment, which will be used in a remission process to repay victims.

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