A federal magistrate judge has recommended slapping Mining Capital Coin with a preliminary injunction, dealing a major blow to the defendants accused of running a securities fraud scheme.

The recommendation came in a "report and recommendation" filed May 18th, just one day before a scheduled hearing. The Magistrate Judge found the SEC demonstrated a proper case for the injunction against all defendants.

That would be Mining Capital Coin itself, along with principals Luiz Carlos Capuci and Emerson Sousa Pires.

Capuci mounted a two-pronged defense. He argued the SEC hadn't properly served him with the motion—convenient, given he fled to Brazil mid-investigation. He also claimed the SEC lacked jurisdiction because the scheme targeted foreign investors with only incidental U.S. participation. The judge rejected both arguments.

Pires hasn't bothered filing a response. When the SEC tracked down his former attorney during the investigation, they learned he was no longer representing him. Pires, a Brazilian citizen, also bolted to Brazil partway through the SEC's probe. Brazil doesn't extradite its own citizens, a detail unlikely lost on him.

The judge called out what appears obvious: both men know what they did was wrong. Capuci liquidated assets and disappeared from the country after the SEC issued subpoenas. During questioning, both men invoked their Fifth Amendment rights and refused to answer. Both are believed to be in Brazil now.

The court found the preliminary injunction necessary specifically because of this behavior. The defendants showed no remorse and could easily launch another scheme using the internet. There's nothing stopping them from rebuilding the operation from Brazil.

Objections to the magistrate's recommendation are due by June 1st. Once that deadline passes, the court is expected to grant the preliminary injunction.

On June 1st, Capuci's attorneys filed an objection. The court extended the temporary restraining order currently in place until June 13th to handle the new filing.

🤖 Quick Answer

What did the federal magistrate judge recommend regarding Mining Capital Coin?
The federal magistrate judge recommended imposing a preliminary injunction against Mining Capital Coin and its principals Luiz Carlos Capuci and Emerson Sousa Pires, finding that the Securities and Exchange Commission demonstrated sufficient evidence of a securities fraud scheme warranting such court-ordered relief.

What arguments did Luiz Carlos Capuci present in his defense?
Capuci argued that the SEC improperly served him with the motion and lacked jurisdiction since the scheme primarily targeted foreign investors with only incidental U.S. participation. He subsequently fled to Brazil during the investigation.

What significance does this recommendation hold?
The magistrate's recommendation represents a substantial procedural victory for the SEC, establishing that preliminary injunction criteria were met, though the final determination required approval at a scheduled hearing following the May 18th recommendation filing.

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