Operator of fake robo advisor admits fraud

The perpetrator of a phony robo-trading scheme involving cryptoassets and foreign exchange pled guilty to fraud in a New York court.

The head of the EminiFX Inc. trading platform, Eddy Alexandre, pled guilty to one count of commodities fraud, and agreed to pay US$248.8 million in forfeiture, along with additional restitution which will be specified by the court.

According to court filings, the scheme raised millions of dollars from tens of thousands of investors on promises that they could earn passive income through automated crypto and forex trading using the company’s proprietary technology.

“Specifically, Alexandre falsely represented to investors that they would double their money within five months of investing by earning at least 5% weekly returns on their investment using a ‘robo-advisor assisted accoun’ to conduct trading,” the U.S. Department of Justice (DoJ) alleged.

In fact, according to U.S. authorities, there was no secret trading technology, and “Alexandre sustained millions of dollars in losses on the limited portion of funds that he did invest, which he did not disclose to his investors.”

Additionally, he allegedly diverted approximately $14.7 million of investors’ money for his personal use.

“Alexandre’s scam caused investors to lose millions of dollars, and this case should serve as yet another warning to cryptocurrency executives that the Southern District of New York is closely watching and ready to prosecute any and all misconduct in the crypto markets,” said Damian Williams, U.S. attorney for the SDNY, in a release.

Last May, Alexandre was also charged in a separate civil action by the U.S. Commodity Futures Trading Commission (CFTC), which seeks restitution to defrauded investors, disgorgement of ill-gotten gains, monetary penalties, and permanent trading and registration bans.

James Langton

James is a senior reporter for Advisor.ca and its sister publication, Investment Executive. He has been reporting on regulation, securities law, industry news and more since 1994.