The Commodity Futures Trading Commission (CFTC) has filed a lawsuit against EmpiresX and three of its executives, alleging they defrauded investors out of at least $41.6 million. The charges center on a scheme that solicited individuals to trade commodity futures, options, and digital assets through commodity interest pools.

Named defendants in the CFTC’s suit include Empires Consulting Corp, Emerson Pires, Flavio Goncalves, and Joshua Nicholas. According to the commission, these individuals and the company engaged in a fraudulent operation from at least September 2020 to the present. They allegedly pooled over $41.6 million from more than 12,500 individuals, with at least $14.3 million coming from over 2,300 victims in the United States.

The commission’s allegations largely mirror those made in a parallel civil fraud lawsuit filed by the Securities and Exchange Commission (SEC). However, the CFTC’s complaint focuses on violations of the Commodity Exchange Act. The regulator claims that of the substantial funds collected, only $1 million was actually used for trading and was subsequently lost.

Pires, Goncalves, and Nicholas are accused of misappropriating at least $5 million of participant funds. This money was allegedly diverted for personal use, including luxury travel, dining, car leases, shopping, and cash withdrawals, rather than for investment purposes. The CFTC’s fraud claims pertain to EmpiresX operating as a commodity pool without proper registration.

Records show Emerson Pires opened a futures trading account under Empires Consulting in April 2021. In the account opening documents, Pires claimed the company had a liquid net worth between $1 million and $5 million. He identified himself as the "owner-signatory, trader" and stated he possessed over ten years of trading experience.

Empires Consulting was described by Pires as a firm specializing in management consulting, assisting businesses with debt restructuring and cash flow management. When questioned about registration requirements for commodity pool operators (CPOs) or commodity trading advisors (CTAs), Pires denied any such need. He also explicitly stated the account would not be used to manage client funds and that assets were solely the property of the applicant.

Further communications in April 2021 involved Pires confirming to the firm carrying the trading account that he did not solicit funds from outside investors. Despite these assurances, the defendants allegedly deposited approximately $9.5 million into a bank account between November 2020 and February 2022, with at least $8 million of those funds originating from investors. The CFTC seeks to bar the defendants from trading commodity futures, options, and swaps, and to impose civil penalties.