Frauds involving digital currencies are nothing new and over the years there have been reports about big cases where the police took down people who were stealing money by using fake digital currencies. The latest example of those illegal activities comes from Brazil where police announced that they have shut down the operation that has been characterized as a digital currency pyramid scheme. The action was conducted on September 21 and it resulted in a big number of people who were arrested.
Some Suspects Still on the Run
Police authorities have issued 18 search warrants and 11 of those warrants resulted in people being arrested. The police has said that two persons are still at large and that they are conducting operations in order to locate those suspects. After the operation was finished, the police made a public statement from which it can be concluded that this fraud has been one of the biggest in the country’s history.
The Civil Police has announced that the case of digital currency pyramid scheme involved more than $79 million in investments. Besides that, the police announced that more than 40,000 people have been affected by this fraud. The operation named ‘Operacao Patrik’ revolved around three companies that have been managing the entire scheme. One of those companies is called Kriptacoin and they were the ones commercializing the false digital currency used in this fraud.
According to the same statement, the pyramid scheme was created somewhere around the end of the last year and it started with the operations in January of this year. The members of those three companies that ran the scheme promised investors one percent returns each day but in the end, it turned out that they could only cash out after one year. However, that was not the basis of the fraud.
Illusion of a Legitimate Business
As police indicated, investors who managed to get new investors to put up money into Kriptacoin would get a 10 percent bonus per every new investor. Even though the scheme involved the fake digital currency called Kriptacoin, investors were required to pay in the fiat currencies. The people behind this scheme have done a lot to make it look like a real business. They ran ads on the Internet and on a local TV station, and they have also included several celebrities into their advertising campaign.
Three companies behind the scheme forged documents in order to make the fraud as legitimate as possible. The police has also stated that one victim invested more than $63,000 and once that person started to demand the returns, the company executives threatened that person and never paid those returns.
Even before the Operacao Patrik, the police was familiar with the three persons who were involved in this scheme because of their previous offenses such as threats, forgery, DUI, property damage, possession of illegal weapons, and several other offenses. On the other hand, the attorney working for these three companies, who is a well-known Wall Street Corporate, has denied all the accusations against his clients and he said that the entire situation will be cleared up in court.
Written by Ivan Potocki
