EminiFX CEO Pleads Guilty to $248 Million Fraud Scheme
The CEO of the purported cryptocurrency and foreign exchange trading platform EminiFX pleaded guilty to defrauding tens of thousands of investors out of almost a quarter of a billion dollars.
Eddy Alexandre, EminiFX’s CEO, scammed investors out of roughly US$248 million by promising them attractive returns through trading secrets he would not disclose, and then redirected their money for his own personal use, according to a U.S. Department of Justice (DOJ) statement.
“Eddy Alexandre admitted today to luring investors to his cryptocurrency investment scam by fabricating weekly returns of at least 5%,” said U.S. Attorney Damian Williams. He further noted that the prosecution against Alexandre “should serve as yet another warning to cryptocurrency executives.”
The crypto industry has suffered a number of blackeyes as of late, from an insider trading scheme involving a former Coinbase executive to Samuel Bankman-Fried’s now infamous billion dollar fraud scheme.
In Alexandre’s case, he falsely marketed EminiFX as a platform through which investors were guaranteed weekly returns of at least five percent thanks to his ‘Robo-Advisor Assisted account’ that could conduct automated trading. The details behind this ‘Robo-Advisor’ were kept secret, including from investors, the DOJ said.
On the surface, all appeared well; each week, the platform’s website fraudulently informed investors that their portfolios had indeed earned a return of at least five percent.
But in reality, the majority of their money had never been invested at all. Instead, Alexandre redirected no less than $14.7 million into his own personal bank account and spent another $168,000 on a BMW.
As for “the limited portion of funds that he did invest,” his Robo-Advisor’s trading strategies resulted in millions of dollars in losses, information which he did not disclose to investors, the DOJ said.
A 2022 complaint filed by the Commodity Futures Trading Commission (CFTC), an independent federal agency, detailed that he pooled—from only a few hundred investors—at least $59 million.
The vast majority of which was used to sustain his ponzi scheme or fund his own personal expenses, with only about $9 million actually allocated for EminiFX trading purposes.
The complaint also highlighted that Alexandre had never registered himself with the CFTC in any capacity.
“By April 27, 2022, Alexandre had lost nearly 70% of the amount he had transferred…through unprofitable trading and fees,” the CFTC said. Despite this, his investors were not informed of their losses and they continued to be fed false information that “their account balances were actually increasing by 5% to 9.99% every week.”
That same month, he held a Zoom webinar in which he enticed prospective participants with the chance to become millionaires, falsely citing that his platform had done so for 10 investors the week prior.
To further sell the dream, he recounted how he had “called each of those participants personally to give them tips on how to live the “millionaire lifestyle,” the CFTC said.
Despite his golden pitch, the complaint noted how, prior to EminiFX’s founding, Alexandre himself was not a millionaire. He had in fact declared bankruptcy in 2019, stating a negative net worth of over $120,000 and financial assets totalling only $6,000.
As part of his guilty plea to one count of commodities fraud, Alexandre agreed to forfeit over $248 million. He faces a potential maximum sentence of 10 years in prison.