Business

Steve Kaaru

Brazilian police arrest culprits behind $210 million crypto scam

The Federal Police in Brazil have finally put an end to one of the country’s biggest crypto scams yet. According to a report by Correio Do Povo, the police arrested ten people involved with the running of the company behind a scam that had allegedly conned over 55,000 individuals, raising over $210 million with promises of incredible returns.

The investigation of the scam was conducted under Operation Egypto, a play on the word crypto and on Egypt’s famous pyramids, because the scam operated like a pyramid scheme. Under the operation, the police worked with the Federal Revenue Agency to investigate financial institutions that operated without authorization from the Central Bank.

Based in Novo Hamburgo in southern Brazil, the suspects allegedly lured investors with the promise of a 15% return on their investment which is way above the market rate. The investors came in numbers, with the police indicating that over 55,000 people invested in the company. Using three bank accounts, the suspects allegedly raised R$850 million ($210 million). Some estimates put the sum at over $250 million.

The regional superintendent of the Federal Police in the state Rio Grande do Sul made it clear that it was raising funds without legal permission that made the venture illegal. The country’s laws prohibit this, he emphasized.

However, the report further notes that the suspects lied to their investors. Instead of investing in cryptos as promised, they ended up spending most of the money. They invested in real estate, luxury cars, expensive jewelry and other luxurious items. One of them bought a prime apartment that cost $1.6 million, with another purchasing a luxury car that cost $123,000. The wife to one of the partners also allegedly purchased jewelry in excess of $1.7 million in 2018 alone.

The police arrested two couples and one man, the five of whom actively operated the business. They also arrested the wife to the latter as well as four more employees to the firm. The police also conducted over 25 searches in eight different cities including Sao Paulo and Florianópolis. The suspects face charges of operating a financial institution without legal authorization, fraudulent management, financial misappropriation, money laundering and criminal organization.

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