Mining Capital Coin CEO and founder Luiz Capuci Jr. was — in an indictment unsealed yesterday — accused by the DOJ of allegedly running a $ 62 million global investment fraud scheme. He's the latest of severalcrypto company heads who have recently been similarly charged.
Through his company, Capuci convinced investors to purchase “Mining Packages," a global network of cryptocurrency mines that promised a certain return on investment every week. But instead of using investors’ funds to mine cryptocurrency as he promised, the DOJ alleges that Capuci diverted the funds to his own cryptocurrency wallets. Another MCC product known as “Trading Bots” operated under the same false pretenses. Capuci claimed that the bots operated in “very high frequency, being able to do thousands of trades per second” and promised investors daily returns.
“As he did with the Mining Packages, however, Capuci allegedly operated an investment fraud scheme with the Trading Bots and was not, as he promised, using MCC Trading Bots to generate income for investors, but instead was diverting the funds to himself and co-conspirators,” wrote the DOJ in its indictment.
MCC seemed to have all the workings of a pyramid scheme. Capuci recruited affiliates and promoters to lure investors. In return, he promised the promoters a number of lavish gifts, including Apple watches, iPads and luxury vehicles.
Currently the FBI’s Miami Field Office is investigating the case. The DOJ has charged Capuci, who is from Port St. Lucie, Florida, with conspiracy to commit wire fraud, conspiracy to commit securities fraud and conspiracy to commit international money laundering. If found guilty, he faces a maximum sentence of 45 years.
In a review of the cryptocurrency mining platform, crypto blogger Peter Obi noted that the combination of MCC’s $ 50 monthly fee for membership and its steep 3% withdrawal fee meant that investors were unlikely to make a profit unless they referred other investors. He pointed out that such a referral process was “particularly worrying” because it was consistent with other past crypto scams.
Indeed, a number of crypto leaders have been accused by authorities of running Ponzi schemes in recent years. Earlier this year the DOJ indicted Bitconnect founder Satishkumar Kurjibhai Kumbhani for allegedly running a $ 2 billion Ponzi scheme — believed to be the largest virtual currency pyramid scheme in history.
Capuci never registered his company with the SEC. The agency today issued a fraud alert for the company. According to the SEC , Capuci and his associates successfully convinced 65,535 investors to purchase mining packages worldwide and promised daily returns of one percent, paid weekly for over a year. In total, the group netted $ 8.1 million from the sale of the mining packages and $ 3.2 million from initiation fees.
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Large-scale cryptocurrency heists remain a significant headache. According to Coindesk, the crypto exchange BitMart has lost the equivalent of $ 196 million (originally estimated at $ 150 million) to a hack. The intruder breached Ethereum and Binance wallets with a flood of transfers starting around 2:30PM Eastern on December 4th, followed by an exodus of tokens two hours later that included Shiba and USDC.
Founder Sheldon Xia said only a "small percentage" of BitMart's assets were at risk. Even so, the company has frozen withdrawals "until further notice" and is reviewing security.
It's not clear who was responsible, but the culprit may have been knowledgeable The stolen funds have been sent to an Ethereum mixing service that could make it difficult to trace the funds. Crypto thieves aren't always that astute. The Poly Network attacker, for instance, offered to "surrender" and wound up returning all their loot. They claimed they were contributing to Poly's security, but that might also have been an attempt to avoid repercussions after researchers obtained potentially identifying data.
While this isn't the biggest digital heist (the Poly attacker grabbed $ 610 million, for instance), Coindesk notes this is one of the larger centralized exchange hacks to date. It also underscores the growing issue of cryptocurrency theft — the technology makes it all too feasible to steal large sums with few repercussions.
Scammers used a new type of phishing campaign, which doesn't use emails, to steal around $ 500,000 worth of cryptocurrency from wallets this past weekend alone. According to Check Point Research, those bad actors purchased Google Ads placements for their fraudulent websites that imitate popular wallets, such as Phantom App and MetaMask. The malicious websites have URLs close to the original's, such as "phantonn.app" — the real service's URL is "phantom.app" — with designs also copied from the real deal.
The scammers will then steal the victim's passphrase if they visit the fake website and type it in. If the victim uses the fake website to create a new wallet, they will be given the attacker's secret recovery phrase. In the event that they use the recovery phrase to log in, they'll actually be logging into the bad actor's account, and any fund transferred to it will go to the scammer. For MetaMask, in particular, the fake website has the option to import an existing wallet. Since doing so requires a seed phrase, the scammers will also get access to it.
As Check Point Research explains, the Phantom App and MetaMask are some of the most popular wallets for Solana and Ethereum. It cross-referenced Reddit forums to come to the conclusion that around half a million dollars were stolen last weekend alone, and it found 11 compromised wallet accounts containing crypto worth between $ 1,000 and $ 10,000. The scammers had already withdrawn funds from those wallets before CPR found them.
CPR says scamming groups are now bidding on keywords on Google Ads, which is a testament to how effective the method is. It's now advising users to examine the wallet's URL closely and to skip Google Ads results altogether so as not to unknowingly fall for the scam.