In reality, there was no bot - the project worked on the principle of a classic pyramid scheme, i.e. it attracted money from existing and new users and then redistributed it among the clients. Nicholas was close to the co-founders of the fraudulent scheme, and together they managed to spend some of the investors' money on luxury goods, real estate and expensive sports cars.

How to cheat on cryptocurrency

The names of EmpiresX’s co-founders, Emerson Souza Pires and Flavio Mendez Goncalves, have also come to light in federal district court in Florida. Together with Nicholas they used part of the investors’ funds for themselves: they bought Lamborghini and jewellery from Tiffany & Co. on lease and also bought a house. By the way, Nicholas himself did make some low-volume deals, although most of them proved to be unprofitable. Accordingly, it was not just a trading bot: the authors of the project themselves did not know how to trade.

According to Decrypt sources, Nicholas pleaded guilty this week to one count of conspiracy to commit securities fraud, for which he faces up to five years in federal prison. The suspect was originally charged in June with conspiracy to commit wire fraud, although these charges were apparently dropped.

Scope of cryptocurrency fraud

Pires and Goncalves fled to their native Brazil after freezing investor withdrawals from the platform earlier this year. They were both charged in June with fraud as well as conspiracy to commit international money laundering. The incident was commented on by George Pirot, the FBI’s special agent in Miami.

Technology has changed, but the crime remains the same. Unscrupulous fraudsters are nothing new in the investment world, but now they are moving their criminal activity into the cryptocurrency industry.

It should be noted that the coin industry is indeed easily cheated. This was demonstrated the day before by a well-known representative of the blockchain community under the nickname FatManTerra, who collected about $100,000 from his subscribers to teach them a lesson. In the end, however, all funds were returned and the lesson was clearly learned.

Parallel to the criminal charges by the US Justice Department, the Securities and Exchange Commission filed a civil complaint against Nicholas, Pires and Goncalves back in June. It alleged that the defendants had breached several securities regulations. These included direct deception of customers as well as a lack of registration with EmpiresX.

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And while there are plenty of projects from scammers in the coin niche, they are trying to be dealt with. The day before, US senators Robert Menendez, Sherrod Brown, Elizabeth Warren, Dianne Feinstein, Bernie Sanders and Cory Booker called on Meta chief Mark Zuckerberg for more action from his company to identify cryptocurrencies. Democrats are demanding coordination with law enforcement and help for fraud victims. The call specifically for Zuckerberg is not accidental: Meta controls popular social platforms Facebook, WhatsApp, Messenger and Instagram, and their total number of active users has long exceeded the one billion mark.

How cryptocurrency fraudsters are being tackled

The request to Meta’s leadership was sent by Democratic senators following numerous reports on how the aforementioned social platforms are being actively used to spread cryptocurrency fraud schemes. Here’s a quote from the appeal.

Based on recent reports of fraud on social media platforms and apps, we are concerned that Meta is a breeding ground for attackers who are causing significant damage to consumers.

The volume of cryptocurrency fraud by year

According to Cointelegraph, politicians referred to a June report by the Federal Trade Commission, which called social media and cryptocurrencies a “combustible combination for fraud”. The commission said that about half of the losses from fraudulent schemes, with a total loss of a billion dollars, are due to social media activity.

Almost four out of every ten dollars lost to social media fraud comes from cryptocurrencies, far more than any other means of payment. The main platforms cited in these reports were Instagram (32 per cent), Facebook (26 per cent), WhatsApp (9 per cent) and Telegram (7 per cent).

In addition, the Democratic senators called on Meta to post warnings about potential fraud in languages other than English. Meta spokesman Andy Stone said the company was investing “significant resources to detect and prevent malicious activity”. Mark Zuckerberg himself has until 24 October to respond to the request.

Read also: Bitcoin became legal tender in El Salvador a year ago. What are the interim results of the innovation?

While crypto is being debated in the Senate, individual industry concepts are already leaving their mark on history. This week, US publisher Merriam-Webster added definitions of the terms “altcoin”, “meta-universe” and “unbankable” to its dictionaries. The word “altcoin” is explained as any of the roughly 20,000 cryptocurrencies in circulation that are seen as an alternative to popular cryptocurrencies – and especially Bitcoin.

Merriam-Webster Dictionary

A metavirtual universe, as defined by the dictionary, is a persistent virtual environment that provides access and interaction to multiple separate virtual realities. Well “unbankable” is someone with limited or no access to banking services.


Obviously, cryptocurrency fraud will not be completely eradicated, as the industry is very young. However, as digital assets become more popular, more and more people will understand the basics of blockchain assets. This, in theory, will allow them to both recognise scams and prevent their own assets from being leaked. In addition, law enforcement will also reduce the willingness of fraudsters to conduct their activities.


What do you think about it? Share your opinion in our millionaires cryptochat. We talk about other interesting topics there as well.