Dutch authorities arrest man over alleged $2.2M crypto mining fraud

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Dutch authorities arrested a 33-year-old businessman over allegations of defrauding investors through a crypto mining fraud.

Dutch tax authority’s investigative department, FIOD, announced that it had taken into custody a director of two private limited companies, which he allegedly used as a front for money laundering, fraud and forgery activities.

The man started his company back in 2017. Through the company, the suspect received money from investors who thought they were buying computers for buying cryptocurrency. The suspect collected about €2 million ($2.2 million) from the investors. Investors were promised returns of 0.3 Bitcoin Core (BTC) per month (about $2,389 at current prices). Investors became worried when they failed to get the returns or their mining computers.

Upon investigations, authorities discovered that the BTC mining machines were never even purchased. Initially, police had searched his house in November 2018 and discovered luxury goods such as bags, dirt bike, and shoes, and believed the suspect also used the money on motorbikes and gambling.

Notably, one of the suspect’s BTC mining companies, Koniz Trading, was declared bankrupt last year after customers’ accused him of fraud, according to reports by the NL Times.

The FIOD added that fighting money laundering is the priority for the government as it is one of the “serious” crimes in the country.

Earlier this year, De Nederlandsche Bank (DNB), the nation’s central bank, and the Netherlands Authority for the Financial Markets published a report that suggested that fiat-to-crypto exchanges and custody solution providers must be licensed as cryptocurrencies carry “high financial crime risks.” In their report, these authorities explained:

“These risks must be addressed effectively, which can be achieved as a result of the international coordination of countermeasures that AMLD5 [the Fifth European Anti-Money Laundering Directive] provides.”

Other countries, notably Malta, have already started to warn its investors on crypto fraud. In late April, authorities in that country came out to issue guidelines that will help investors identify fraudulent crypto projects. This was done through a report released by the Malta Financial Services Authority (MFSA).

Among the issues addressed in the report, is the need for investors to protect themselves from engaging in suspicious projects, especially those that promise huge returns.