"SEC Announces Charges in Cryptomining and Trading Scheme," Blockchain Law Center

On May 6, 2022, the SEC announced fraud charges against MCC International Corps., its founders, Luiz Carlos Capuci, Jr. and Emerson Souza Pires, and two entities controlled by Mr. Capuci. The charges stem from unregistered offerings and allegedly fraudulent sales of investment plans called mining packages. The SEC's complaint alleges that the defendants earned $8.1 million from the sale of mining packages and $3.2 million in initiation fees. The defendants’ assets have been frozen in accordance with a Temporary Restraining Order issued by the United States District Court for the Southern District of Florida.

According to the SEC's complaint, the defendants sold mining packages to over 60,000 investors, promising weekly returns of 1 percent for up to 52 weeks. The profits allegedly were to be the result of operations involving cryptocurrency mining, trading stocks and foreign exchange, and trading cryptocurrency on digital asset trading platforms. The SEC also alleges that investors were promised returns in Bitcoin but were later required to withdraw their investments in tokens owned by MCC. Investors allegedly encountered purported errors that prevented their attempts to liquidate these tokens.

The defendants have been charged with violating the registration and anti-fraud provisions of the Securities Act of 1933, the Securities Exchange Act of 1934 (Exchange Act). The ongoing investigation is being conducted by the SEC's Crypto Assets and Cyber Unit.

Given the SEC's recent decision to nearly double the size of the unit responsible for bringing enforcement actions related to crypto, we may expect more enforcement actions similar to those announced today. McGonigle's top-rated team of experienced attorneys is available to assist with matters in this area, including due diligence and compliance.

DISCLAIMER: This article was originally published by McGonigle PC prior to their combination with Davis Wright Tremaine LLP. The article is published here with permission.