On May 6, the Securities and Exchange Commission announced that it had filed charges against a cryptomining company, its founders, and other related entities in connection with alleged unregistered offerings and fraudulent sales of investment plans. MCC International Corp. (“MCC”) and its founders Luiz Carlos Capuci, Jr. and Emerson Souza Pires allegedly defrauded thousands of investors through the sale of “mining packages.” The SEC alleges that, beginning in early 2018, MCC, Capuci, and Pires told investors that they could receive “profit sharing” from MCC’s business mining cryptocurrency and trading cryptocurrency, stocks, and foreign exchange using arbitrage and “semi-automatic robotic trading.” They allegedly promised investors a 1 percent return a week for up to a year. This promise was so enticing that MCC allegedly sold mining packages to over 65,000 investors.
The SEC alleges that, at least initially, investors were told that they would receive their returns in Bitcoin, however, they were later required to withdraw their investments in tokens created by MCC called Capital Coin. Once withdrawn, investors were allegedly required to redeem the Capital Coins on a fake crypto trading platform created and managed by Capuci. When investors tried to convert the tokens to fiat currency, they received errors that prevented them from doing so. The investors were then forced to buy an additional mining package or forfeit the investment.
Rather than provide returns to the investors, Capuci and Pires allegedly used the money received from investors to fund lavish lifestyles. Their purchases included Lamborghinis, yachts, and real estate. In April 2022, the United States District Court for the Southern District of Florida issued a temporary restraining order against the defendants and froze their assets. In total, the defendants allegedly received at least $11.3 million from investors. They are charged with violations of the registration and anti-fraud provisions of the federal securities laws. Capuci and Pires also face liability as control persons. The defendants face a potential injunction, disgorgement, civil penalties, and officer and director bars.
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