- Mining Capital Coin seemed to have all workings of a pyramid scheme, says DOJ.
- Capuci accused of diverting investors’ money into his own crypto wallet.
- SEC states that Capuci convinced 65,535 investors to purchase mining packages worldwide and promised daily returns of one percent and allegedly scammed them.
Mining Capital Coin Chief Executive Officer and founder Luiz Capuci Jr. was indicted for allegedly masterminding a USD 62 million global investment fraud scheme through his purported cryptocurrency mining and investment platform, the U.S. Department of Justice announced on Friday (May 6).
Capuci, through his company, convinced investors to purchase “Mining Packages,” a global network of cryptocurrency mines that promised a certain return on investment(ROI) every week. The DOJ alleges that Capuci, instead of using investors’ funds to mine cryptocurrency as he promised, diverted the funds to his own cryptocurrency wallets.
Capuci Jr., 44, of Port St. Lucie, Florida, “misled investors about MCC’s cryptocurrency mining and investment program, under which investors could invest in MCC by purchasing Mining Packages,” according to a DOJ press release.
He is also accused of fraudulently marketing MCC’s purported Trading Bots as an additional investment mechanism for investors to invest in the cryptocurrency market and recruiting promoters and affiliates to promote MCC and its various investment programs through a pyramid scheme, the press release stated.
Capuci also promoted MCC’s cryptocurrency, called Capital Coin, as a decentralized autonomous organization that was “stabilized by revenue from the biggest cryptocurrency mining operation in the world” but later diverted investors’ money to his own cryptocurrency wallets.
The FBI’s Miami Field Office is currently handling the case. The DOJ has charged Capuci with conspiracy to commit securities fraud, conspiracy to commit international money laundering, and conspiracy to commit wire fraud. If found guilty, Capuci faces a maximum sentence of 45 years.
His company is also not registered with the SEC. The agency has issued a fraud alert for his company. Capuci and his associates successfully convinced 65,535 investors to purchase mining packages around the world and promised daily returns of 1%, paid weekly for over a year, the SEC press release noted. The group in total netted approximately USD 8.1 million from the sale of the mining packages and USD 3.2 million from initiation fees.
This is also not the first time authorities have accused crypto leaders of running Ponzi schemes. In early 2022, the DOJ indicted Bitconnect founder Satishkumar Kurjibhai Kumbhani for allegedly running a USD 2 billion Ponzi scheme — widely regarded as the largest virtual currency pyramid scheme in history. In April, the DOJ also announced that Reginald Fowler, a former co-owner of the NFL’s Minnesota Vikings, had been charged for enabling the fraudulent processing of $750 million from several cryptocurrency exchanges.