Surprisingly, the Crypto project that promised 5% returns per week turned out to be a Ponzi scheme
Last May, the FBI arrested EminiFX founder Eddy Alexandre after charging him with fraud.
In June, the Department of Justice and the Commodity Futures Trading Commission accused his cryptocurrency firm EminiFX of being a Ponzi scheme, arguing that it defrauded thousands of investors of $59 million.
And now, according to a preliminary report, it appears the company has made a lot more money than initially thought, raising $250 million from around 62,000 user accounts between September 2021 and May 2022. The Washington Post reports.
This is a highly publicized example of a crypto firm seemingly exposed for what it really is: a scam. It certainly wouldn’t be the first. Yet, if the allegations are true, they stand out for their lies.
“It’s like no other case I’ve followed,” wrote WaPo columnist Michelle Singletary.
EminiFX has promised investors returns of at least five percent per week, which should already raise countless red flags, using what it claims is a proprietary trading system that it claims has invested money. money in the foreign exchange markets.
But investigators quickly figured out the ruse, finding he was most likely using investor funds to pay other investors, a hallmark of a Ponzi scheme.
There was even a “multi-level marketing aspect” to EminiFX’s operations, according to Singletary, rewarding those who recruit others with bonuses.
While returns remained positive each week, “I found no investment activity to support these returns,” said David Castleman, an attorney at Raines Feldman LLP, which filed the preliminary report. WaPo.
This is where the story gets even wilder. Many investors – or victims – are from Haiti and support Alexandre, who was born there. A petition on Change.org has already been signed by nearly 14,000 EminiFX investors.
Users saw the returns, but never opted to cash out so they could reinvest the amount for future returns, which is exactly what makes a Ponzi scheme work.
“Many users appear to have never withdrawn or redeemed funds,” Castleman noted in a report, cited by WaPo.
Worse still, Castleman found that there was no evidence that the real estate investment system even existed.
It’s a devastating story that seems to illustrate an age-old lesson: if it sounds too good to be true — above all in the chaotic crypto world – it’s probably a scam.
The fact that Alexander still enjoys substantial support from his victims only adds to the grief.
READ MORE: The FBI says it busted a big crypto Ponzi scam. He just got bigger.