Blog: SEC charges company with fraudulent cryptocurrency violations – Financial Regulation News – Financial Regulation News

The Securities and Exchange Commission has levied fraud charges against a company for illegal cryptocurrency violations.

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The SEC charged MCC International Corp., also called Mining Capital Coin Corp., along with its founders Luiz Carlos Capuci, Jr. and Emerson Souza Pires, and two other entities controlled by Capuci, with the unregistered offerings and fraudulent sales of investment plans called mining packages to thousands of investors.

The SEC alleges that MCC, Capuci, and Pires netted at least $8.1 million from the sale of the mining packages and $3.2 million in initiation fees. Specifically, since at least January 2018, MCC, Capuci, and Pires sold mining packages to 65,535 investors worldwide and promised daily returns of 1 percent, paid weekly, for a period of up to 52 weeks.

The SEC also alleges that MCC represented that the weekly profits resulted from “profit sharing” and that MCC earned profits from its operations involving cryptocurrency mining, trading stocks and foreign exchange, and trading cryptocurrency on platforms through arbitrage trading and semi-automatic robotic trading. Initially, according to the complaint, MCC investors were promised returns in Bitcoin, but later, the defendants required investors to withdraw their investments in tokens called Capital Coin (CPTL), which was MCC’s own token. Further, MCC investors were required to redeem their CPTL on Bitchain, a fake crypto asset trading platform Capuci created and managed, the complaint said. However, when investors tried to liquidate their CPTL on Bitchain before their one-year memberships expired, they encountered purported errors that stymied their efforts and were required to either buy another mining package or forfeit their investments.

“As the complaint alleges, Capuci and Pires took every opportunity to extract more money from unsuspecting investors on false promises of outlandish returns and used investor funds raised from this fraudulent scheme to fund a lavish lifestyle, including purchasing Lamborghinis, yachts, and real estate,” A. Kristina Littman, chief of the SEC Enforcement Division’s Crypto Assets and Cyber Unit, said. “The restraining order and asset freeze helps preserve investor assets and puts a stop to the defendants’ alleged ongoing fraudulent enterprise.”

On April 21, the United States District Court for the Southern District of Florida issued a temporary restraining order against all defendants and an order freezing defendants’ assets, among other relief.

The SEC’s complaint charges the defendants with violating the registration and anti-fraud provisions of the Securities Act of 1933, the Securities Exchange Act of 1934, and Capuci and Pires with control person liability on behalf of MCC under the Exchange Act. The SEC’s complaint seeks injunctions against future securities law violations, disgorgement of the defendants’ ill-gotten gains, civil penalties, and officer and director bars against Capuci and Pires.

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