SEC alleges $8m investor fraud by cryptocurrency mining company | Loop Cayman Islands

The content originally appeared on: Cayman Compass

The Securities and Exchange Commission (SEC) has alleged that MCC International Corp. (MCC), a Massachusetts corporation, defrauded investors of at least $8 million through MCC’s offer of general virtual services, including cryptocurrency mining, trading stocks and foreign exchange and trading cryptocurrency.

According to the filed SEC complaint, MCC allegedly crowed about its thousands of machines, in the United States and abroad, that actively mined for cryptocurrency, like Bitcoin. It allegedly boasted about its team of traders and phalanx of trading robots, who relentlessly found and exploited arbitrage opportunities in the stock, foreign exchange, and crypto markets. MCC also allegedly touted how, by planning to mine for gold in Africa and to drill for oil in Canada, it would be diversifying its portfolio while hedging its bets.

In addition to the foregoing, MCC and/or its founders Luiz Carlos Capuci, Jr. (aka Junior Caputti or Capuci) and Emerson Souza Pires (Pires), reportedly offered investors 1 per cent daily i.e., a guaranteed annual return of 364 per cent.

As a result of MCC’s promotion, the SEC said that “tens of thousands of investors in the United States and abroad lined up to invest in MCC.”

While MCC allegedly made offerings to investors, the SEC said that MCC was not registered with the SEC in any capacity, nor has it ever registered or tried to register any offering of securities under the Securities Act or any class of securities under the Exchange Act. As a consequence, the SEC’s position is that, by engaging in the offer and sale of securities, by the use of the means and instruments of transportation or communication in interstate commerce or by use of the mails, MCC directly or indirectly, have employed devices, schemes and artifices to defraud, obtained money and property by means of untrue statements of material fact and engaged in transactions, practices, and courses of business which operated or would operate as a fraud or deceit upon the purchasers of such securities.

According to the SEC complaint, MCC, Capuci, and Pires acted knowingly, or with extreme recklessness, in engaging in the fraudulent conduct described above and in addition, acted negligently in engaging in such conduct. In fact, the SEC found that there was no mining for cryptocurrency and no trading robots like MCC allegedly marketed to investors.

The SEC is now asking the United States District Court Southern District of Florid to issue permanent injunctions restraining and enjoining defendants from violating sections of the Securities Act and Exchange Act. The SEC is also asking the court to prevent the defendants from soliciting any new investors, accepting additional funds from existing investors or issuing, purchasing, offering, or selling any security.

Further, the SEC is seeking an order for defendants to disgorge the ill-gotten gains received because of the violations alleged, together with the payment of civil penalties.

Lastly, the SEC is seeking to permanently bar defendants Capuci and Pires from serving as an officer or director of any company that has a class of securities registered pursuant to Section 12 of the Exchange Act or that is required to file reports pursuant to Section 15(d) of the Exchange Act.

The SEC’s ongoing investigation is being conducted by Christine B. Jeon of the Crypto Assets and Cyber Unit, with the assistance of Devlin N. Su, Larry Brannon, and Steven Tremaglio of the Chicago Regional Office. Amy Flaherty Hartman and Ms. Littman are supervising the case. The SEC’s litigation will be led by Jonathan Polish.