Mining Capital Coin CEO and Founder Luiz Capuci Jr. – in an indictment unsealed yesterday – was accused by the DOJ of running a $62 million global investment fraud scheme. He is the newest of the some the head of the cryptocurrency company who have recently been charged the same.
Through his company, Capuci convinced investors to buy a “Mining Pack,” a global cryptocurrency mining network that promises a certain weekly return on investment. But instead of using investor funds to mine the cryptocurrency as promised, the DOJ alleges that Capuci redirected funds to his own crypto wallet. Another MCC product called “Trading Bots” works with the same spoofing behavior. Capuci claims that the bots operate at a “very high frequency, able to execute thousands of transactions per second” and promise daily investors profits.
“However, when he did with Mining Packages, Capuci allegedly operated an investment fraud scheme with Trading Bots and, not as he promised, used MCC Trading Bots to generate income for investors, but instead transferred funds to themselves and co-perpetrators,” the DOJ wrote in its indictment.
MCC seems to have all the operations of a pyramid scheme. Capuci recruited affiliates and promoters to attract investors. In return, he promised promoters a number of lavish gifts, including Apple watches, iPads, and luxury cars.
The FBI’s Miami Field Office is currently investigating the incident. The DOJ charged Capuci, from Port St. Lucie, Florida, with conspiracy to commit electronic fraud, conspiracy to commit securities fraud and conspiracy to launder international money. If convicted, he faces a maximum sentence of 45 years.
In a review of the crypto mining platform, crypto blogger Peter Obi note that the combination of MCC’s $50 monthly membership fee and high 3% withdrawal fee means that it is difficult for investors to make a profit unless they refer other investors. He pointed out that such a referral process is “particularly worrisome” as it is consistent with other crypto scams in the past.
Indeed, some Cryptocurrency Leaders has been accused by the authorities of running Ponzi schemes in recent years. Earlier this year, the DOJ indicted Bitconnect founder Satishkumar Kurjibhai Kumbhani for allegedly operating The $2 Billion Ponzi scheme – arguably the largest cryptocurrency pyramid scheme in history.
Capuci has never registered his company with the SEC. The agency today issued a fraud alert to the company. According to SEC , Capuci and his associates have successfully persuaded 65,535 investors to buy mining packages worldwide and promise daily returns of one percent, paid weekly for over a year. In total, the team raised $8.1 million from the sale of mining packages and $3.2 million from initiation fees.
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