Cryptocurrency crime cartel managed to raise over $200 million from investors
A Brazilian cryptocurrency crime cartel has been shut down after conning over 55,000 investors for over $200 million.
The cartel ran an unlicensed financial institution without authorization from Brazil‘s Central Bank. The scammers claimed to offer cryptocurrency investments and promised investors 15-percent returns on their capital, local news Correio Do Povo reports.
The Federal Revenue Service said the company had managed to raise around R$850 million ($210 million) by February 2019 from would-be investors. Authorities believe the number could actually be closer to R$1 billion ($248 million), though.
The illegal operation has since been dismantled following a joint operation between the Brazilian Federal Police and the Federal Revenue Agency. Operation Egypto executed 10 arrest warrants, and 25 search and seizure orders across eight Brazilian cities, including Novo Hamburgo where the cartel’s business was based.
The Federal Police’s Office of Corruption and Financial Crimes’ Eduardo Dalmolin Boliis highlighted that investing in cryptocurrencies isn’t actually illegal. However, “the problem with this company is that it was acting without authorization,” he said in the report.
Following operation Egypto’s investigations, authorities found that the group was not investing in cryptocurrency at all. Instead, the group was placing it in a series of low-yield and fixed rate investments, and spending it on luxury items like cars, real estate, and jewelry, among other things.
Authorities have seized the firm’s financial assets, dozens of real estate, 36 luxury vehicles, and an undisclosed amount of money.
The group is also being investigated for fraudulent management, financial misappropriation, money laundering, and criminal organization.
This isn’t the first cryptocurrency related crime in Brazil, earlier this year Brazilian authorities arrested a man on suspicion of running a drug trafficking ring and laundering money with Bitcoin.
On that occasion, police seized over R$250,000 ($63,000) worth of equipment used to mine Bitcoin.