The Temporary Receiver hasn’t uncovered any legal EminiFX commercial activity since May 11.
The Receiver has not yet found an EminiFX account with revenue from an underlying business operation, according to a June 1 report (or any legitimate business activity that requires the ongoing use of the business premises or employees once the data is fully secured).
On May 12, seized assets totaled $62 million.
Temporary Receiver Eddy Alexandre’s crypto on an Estonian exchange is his top priority.
The Receiver has yet to collect information from the Estonia-based Crypto Exchange 4, where Defendant Alexandre had an account in his own name. Millions of dollars in bitcoin were put in users’ EminiFX accounts and dispersed to users’ EminiFX accounts through Alexandre’s account at Crypto Exchange 4, consistent with the CFTC’s accusation that Alexandre ran EminiFX “in the manner of a Ponzi scheme.”
The receiver has no evidence that Crypto Exchange 4 was used for profitable trading. “Exchange 4” documents will certainly reveal that EminiFX was a Ponzi scam, which is why Eddy Alexandre has refused to turn over financial records.
Exchange 4 has “voluntarily blocked” Alexandre’s EminiFX funds.
Alexandre appears to have been constructing a real-estate empire with $14.7 million in investor funding. The Receiver has found 46 residential real estate assets in Suffolk County that EminiFX is in contract to buy out of foreclosure.
The receiver found two Nassau properties. The first, a contract to be purchased by EminiFX for over $1.5 million, appears to be worth less than the additional cost of marketing and resale even if the contract were to close.
As a result, the receiver has accepted the seller’s offer to rescind the contract, return the deposit, and enter into mutual release. The second contract to be purchased by Defendant Alexandre for over $5 million looks to have its 10% deposit funded with customer cash, and the Receiver has alerted the escrow agency, the bank holding the deposit, and the SRO.
The receiver’s team has determined from acquired evidence that at least 62,000 active EminiFX user accounts, with 25,000 to 50,000 regularly “trading.”
“Trading” refers to EminiFX investor accounts.
The Receiver has received over 8000 investor emails since taking over EminiFX.
The $62 million confiscated seems good for investors, albeit recovery is far off. This depends on how much is held in Exchange 4, if it can be recovered, and whether Alexandre has any more crypto accounts.
Regarding investor claims verification (which is also far off), the Receiver adds, “It appears that the user data just acquired from EminiFX provides extensive contact information that the Receiver and his staff can use to build a notification and claims process.”
Defendant Alexandre and other parties may use the Fifth Amendment to prevent the receiver’s data collection.
The found items should help streamline the victim claim procedure.
It may also provide ammunition for clawback litigation against EminiFX’s top net-winners.
The Receiver has begun turning over the EminiFX accounts to the Receivership estate, which will result in over $53 million in cash. The receiver expects to eventually distribute most of the cash to investors. The Receiver plans to investigate the underlying fraudulent conduct utilizing recovered emails, witness interviews, and third-party documentation.
The receiver plans to use the investigation’s results to pursue cost-effective receivership claims and reject claims from guilty parties. The Receiver will update the court on his inquiry and third-party lawsuit plans.
The EminiFX hearing is set for June 7.
The CFTC and Alexandre have discussed a consensual preliminary injunction.
That is, giving a preliminary injunction without steamrolling Alexandre in court.
If an agreement is reached, the parties must seek a preliminary injunction by June 3.
The next docket check is June 4; I’ll report then.