Cryptocurrency fraud: Brazilian “king of bitcoin” arrested for allegedly embezzling $ 300 million Bribed from Large Number of Investors

The self-proclaimed “king of bitcoin” in Brazil has been arrested for embezzling 1.5 billion Brazilian reals (around $ 300 million) from his customers through a cryptocurrency system. Claudio Oliveira was the chairman of bitcoin group Banco, a Brazilian digital currency brokerage firm. In 2019, he claimed his company was hacked and lost over 7,000 bitcoins. He would then have requested and obtained from the Brazilian authorities a judicial reorganization in order to reorganize his finances. But a three-year investigation, carried out into him and his business by law enforcement officials, alleges Oliveira and his group have engaged in scams and embezzlement. Which culminated in his recent arrest, according to a police press release.

Federal police in the city of Curitiba, in southern Brazil, arrested Oliveira alongside some of the other executives of the bitcoin group Banco. In a press release on Monday, police revealed they were investigating the group in connection with allegations of money laundering, embezzlement, bankruptcy and other offenses. Dubbed Operation “Daemon” and led by a special team of 90 agents, the Banco Group bitcoin investigation also resulted in 22 search and seizure warrants. The police would have a court order authorizing the seizure of property related to the business.

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Operation Daemon had been going on for quite some time, having started in 2019. It all started with the company blocking customer withdrawals. The concerned investors approached the authorities and the investigation has started. The “king of bitcoin” claimed soon after that the company had been hacked and more than 7,000 bitcoins had been stolen. He failed to provide any tangible evidence of the hack, however, even after a court ordered him to do so, prompting even more questions. Coindesk is among the first to report these events after a press conference held Monday by the authorities.

In September 2019, the company had been sued by more than 200 investors, which prompted Oliveira to file a request for receivership. It’s an arrangement, court-approved under Brazilian law, that allows a company to avoid filing for bankruptcy by finding other ways to pay off creditors and reorganize finances.

However, at the beginning of 2020, it was found that the group was not fulfilling the obligations determined at the time of the reorganization decree and, to promote its activities and attract new customers, it continued to offer contracts to the public. collective investment without being registered with the market regulator. He continued to recruit new clients and neglected his duty to reimburse his creditors, as required by the court.

Although Oliveira has previously claimed that he was unable to reimburse customers who lost their money in the alleged hack, leaked tax documents showed he held 25,000 bitcoins just months after the hack. Coingeek reported. According to tax experts, Brazilian courts have the power to order him to reimburse investors from this reserve, even if he holds it in his personal capacity.

The Banco bitcoin group saga has affected more than 20,000 investors, although only around 200 lawsuits have been filed against it. The value of their damages ranges from $ 3,000 to $ 3 million, according to media reports.

During their investigations, the police discovered that Claudio Oliveira had already been involved in a similar situation in the United States. The press release read: “Police investigations also revealed that the person under investigation has also committed similar crimes in the past in the United States and possibly in other European countries. The investigative work on the ground also made it possible to identify persons suspected of having participated in the commission of the crimes under investigation ”.

“The court orders served today aim not only to cease criminal activities, but also to elucidate the participation of all those under investigation, as well as the search for assets to allow, even partially, repairing the damage generated to the victims, ”the statement added.

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Other recent cryptocurrency scams

This story is the latest in fraudulent activity related to cryptocurrency. In April, as bitcoin soared, Ameer, the CEO of Africrypt, a cryptocurrency investment firm, informed investors that the company had been the victim of a hack. He advised them not to report the event to authorities or their lawyers, as this would only hamper the recovery process, according to a report.

South African Ameer founded Africrypt in 2019 with his brother Raees. The two disappeared with 69,000 bitcoins valued at around $ 3.6 billion at the time of the report’s release. The alleged scam represents the biggest scam in cryptocurrency history, even bigger than the $ 2 billion that disappeared in Turkey in the same month of April.

Regarding this latest cryptocurrency fraud, the cryptocurrency exchange Thodex suspended trading after posting a mysterious message on its website stating that it needed five days to process an unspecified outside investment, reported the BBC at the time. According to press reports, the Thodex platform closed when it held at least two billion dollars from 391,000 investors.

As the platform’s Turkish founder fled to Albania with the $ 2 billion in investor assets, Ankara issued an international arrest warrant at the time. Turkish police arrested 62 suspects in raids in eight cities, including Istanbul, where the platform is based. The investor lawyer told AFP that hundreds of thousands of users were unable to access their digital wallets. “We have started legal proceedings and filed a complaint with the prosecutor’s office,” he said. The prosecution was investigating the businessman for “aggravated fraud and founding of a criminal organization”.