Crypto CEO Indicted for Pyramid Scheme

The US Justice Department has indicted Mining Capital Coin (MCC) CEO Luiz Capuci Jr. for “allegedly orchestrating a $62 million global investment fraud scheme,” the federal agency said last Friday.

MCC is a cryptocurrency mining and investment platform. Authorities allege that Mr. Capuci sold “Mining Packages” offering substantial returns from mining new cryptocurrencies.

The US Securities and Exchange Commission (SEC) noted 65,000 investors were promised daily returns of 1% for up to a year. Instead, Capuci diverted the funds to his own cryptocurrency wallets. 

The SEC also alleges that MCC offered access to a dubious product called “Trading Bots,” which claimed to operate at “very high frequency, being able to do thousands of trades per second,” thus providing handsome daily returns.

This is not the only high-profile case to hit the news this year. For example, the founder of an unrelated company, BitConnect, has been indicted for allegedly orchestrating a $2.4 billion global Ponzi scheme.

What does this mean for me? 

Cryptocurrency-based fraud undermines financial markets worldwide as bad actors defraud investors and limit the ability of legitimate entrepreneurs to innovate within this emerging space.

For the cryptocurrency investor, it is important to understand that as long as the industry is bedeviled by bad publicity like this, mainstream acceptance will be hard to obtain. On the other hand, it is comforting to see regulators like the SEC play an active role in stamping out illegal practices.