Proposed Cryptocurrency Class Action Goes Forward in Florida With Defendant’s Help

Two plaintiffs in Miami-Dade County have filed a class action complaint against cryptocurrency platform Empires X Corp. and its founders based on an alleged Ponzi scheme. In Villanueva v. Empires X Corp., pending in Florida’s Eleventh Judicial Circuit, the plaintiffs allege that they, as well as several other damaged investors, provided millions of dollars to Empires X Corp. based on extensive misrepresentations that Empires X Corp. was a legitimate investment opportunity for trading cryptocurrency. The plaintiffs claim, however, that Empires X Corp. was nothing but a sham and that Empires X Corp. and its founders converted the investment funds provided for their own personal use without providing investors with any of the promised profits. The plaintiffs are seeking to bring claims on their own behalf and for all persons who used the Empires X platform to place cryptocurrency investment orders based on the well-established requirements detailed in Florida Rule of Civil Procedure 1.220: numerosity, commonality, typicality, and adequate representation.

What makes this proposed class action different from the typical class action is that one of the defendants, co-founder Joshua David Nicholas, has agreed to help the proposed class recoup what they can from Empires X Corp. and the other co-founders, who have purportedly gone “on the run” with the stolen funds. Nicholas claims to have no funds to make restitutionary payments to the plaintiffs, but he does possess “detailed information regarding the inner workings of the Empires X Ponzi scheme,” information likely to lead to additional evidence of the other defendants’ liability, and information of any assets remaining in the United States for potential execution in the future. Accordingly, when the plaintiffs moved for preliminary approval of the class action settlement and certification, Nicholas did not oppose the motion.

On August 30, 2022, the court approved the unopposed motion and preliminarily approved the class action settlement and certification. The final approval hearing is set for late October “to consider the fairness, reasonableness, and adequacy of the proposed settlement and to determine whether the settlement should be finally approved.” Whether the settlement and reliance upon a co-defendant will prove to be fruitful remains to be seen. However, the case should prove to be interesting given the facts. Stay tuned for updates.