Over 55,000 Brazilian citizens have found themselves conned out of a whopping $200 million after falling victim to a cryptocurrency crime cartel.
The cartel, who have since been shut down, were running an unlicensed financial institution without any authorisation from Brazil’s Central Bank. Those behind the scam were offering unwitting investors the chance to get their hands on certain cryptocurrencies, as well as promising them 15% returns on their capital.
According to the country’s Federal Revenue Service, the con managed to raise around $210 million by February of this year. Some say that this could be a rather conservative estimate and place the real figure at almost $250 million.
Luckily, the scam is no more as a joint operation between the Federal Revenue Agency and the Federal Police brought them to their knees just days ago. Codenamed “Operation Egypto”, the taskforce executed 10 arrest warrants and 25 search and seizure warrants across eight cities, including the city of Novo Hamburgo where the cartel was based.
The five partners of the company, three couples, and four employees were all apprehended after 18 people were investigated, as well as five legal entities.
Eduardo Dalmolin Boliis from the Federal Police’s Office of Corruption and Financial crime was quick to point out that investing in crypto is not illegal in the country. He added that the problem with the cartel was that they were acting without authorisation.
After the conclusion of the investigation, Brazilian authorities found that the group of criminals were not actually investing in cryptocurrency. Instead, they were putting funds into a number of low-yield and fixed rate investments and cashing in the proceeds on real estate, luxury cars, jewellery, and other luxury items.
Boliis noted that one of those arrested had managed to accumulate $30 million in assets in less than a year. He described the scam, and the revelations of the investigation as “very surreal”.
Following the investigation, the authorities seized dozens of properties, almost 40 luxury cars, the firm’s financial assets and an undisclosed amount of cash. Members of the cartel are also under investigation for other crimes relating to financial misappropriation, money laundering, fraudulent management, and other links to organised crime.
But this is not the first crypto-crime in the country. Earlier this year, the authorities apprehended a man on charges of running a drug trafficking ring and then laundering the proceeds with Bitcoin. The police seized around $63,000 worth of Bitcoin mining equipment.
The moral of the story for the 55,000 hopeful cryptocurrency investors is that if something seems too good to be true, the chances are that it probably is!