Incident Overview
The head trader of EmpiresX Joshua David Nicholas pled guilty to running a Ponzi scheme. 100,000,000 $USD of investor's funds were taken over two years.
EmpiresX was a fake trading company, which used "trading bots with artificial and human intelligence" . Actually, there were no bots behind trading operations, and the 'guaranteed' returns for early investors had been paid by recent investor's funds. The classic Ponzi scheme was run over two years from 2020 to 2022.
The total stolen amount reached approximately 100,000,000 $USD, when the actual amount that was used for trading was just nearly 1,000,000 $USD. On 30 November 2022, Joshua David Nicholas pled guilty to running a Ponzi scheme and have been handed an over four-year jail sentence.
Incident Report
Protocol Information
Market Context at Time of Hack
What the Attacker Needed to Succeed
Understanding the prerequisites for this type of attack helps auditors identify protocols that are most at risk and helps developers build better defenses.
What Auditors Should Check
If you're auditing a protocol with similar architecture to EmpiresX, these are the critical security checks that could have prevented this incident (September 2022).
- Verify all logic paths related to Other are guarded by proper access controls and input validation
- Review privileged functions (owner, admin, governance) for potential abuse vectors - centralization risks should be documented and bounded with timelocks or multi-sigs
Master these auditing techniques with hands-on labs and real exploit scenarios in the Smart Contract Hacking course.
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