Brazil court orders ‘Bitcoin Pharaoh’ to return $3.7B to Ponzi scheme victims

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A Federal Court in Rio de Janeiro has ordered Glaidson Acacio dos Santos to deposit the sum of $3.7 billion to investors. The court earmarked the amount as reimbursement to victims of the defendant’s alleged Ponzi scheme.

Widely known as the Bitcoin Pharaoh, Dos Santos and his company, G.A.S. Consultoria e Tecnologia, told investors that they would earn impressive returns of 10% per month on their digital assets. However, this promise turned out to be false as Dos Santos spent the funds on luxury items and turned the operation into a pyramid scheme to lure new investors.

Federal Police acting on a tip-off carried out a series of raids at different locations that led to the arrest of Dos Santos and five others. The raids were code-named “Operation Kryptos,” with law enforcement confirming that they seized up to 591 BTC, 21 luxury vehicles, expensive watches, and other items.

Dos Santos has 72 hours to comply with the court’s decision to deposit the amount, but parties interested in the case are unsure whether or not he will comply. According to details gleaned from his firm’s website, over 122,000 investors parted with their funds, and local publication O Globo stated that the aggrieved investors are seeking restitution amounting to nine billion Brazilian reais.

Dos Santos, a former waiter, rose to the top of Brazilian aristocracy after turning to BTC and had his sights firmly fixed on running for political office. However, his ambitions were scuttled by the Regional Electoral Court of Rio de Janeiro, which rejected his candidacy.

“The candidacy of the businessman, who remains in prison, was unanimously challenged by the Regional Electoral Court, on the grounds that Santos is the director of a financial establishment subject to liquidation,” wrote a local news outlet. “The rapporteur of the case, Judge Luiz Paulo da Silva Araujo Filho, pointed out that Santos is accused of federal crimes, including links with the militia.”

Brazil’s tango with digital assets

In Latin America, Brazil is becoming the nation with the highest adoption rates of virtual currencies. Shortly after El Salvador adopted BTC as legal tender, there was widespread speculation that Brazil would be next in line, but such a move did not materialize.

The country’s Senate seized the buzz to pass an encompassing law that will lay the groundwork for future regulations in the ecosystem. A key provision of the law is the provision for stiff penalties for digital asset scammers in the country and the creation of an enabling environment for mining.

“Regulation is very welcome [and] the trend is for Brazil to follow the largest economies in the world and facilitate the mining of these coins on Brazilian soil,” said Bernardo Schucman, senior VP of CleanSpark.

Watch: Regulatory compliance for blockchain & digital assets