Brazilian cryptocurrency exchange Atlas Quantum that is believed to have formed a financial pyramid scheme, has allegedly refuted the deadline decided by the Federal Court of Brazil. The federal court had ruled on September 17 that the activities of this cryptocurrency exchange is likely to be forming a financial pyramid and pronounced a deadline of 48 hours for the company to clear all outstanding accounts. The court has also decided to freeze the assets of Atlas Quantum, but the latter has rejected the ruling and the deadline on the very next day.
A pyramid scheme is defined as a “business model that recruits members via a promise of payments or services for enrolling others into the scheme, rather than supplying investments or sale of products. As recruiting multiplies, recruiting becomes quickly impossible, and most members are unable to profit, as such, pyramid schemes are unsustainable and illegal.” This is because, in such schemes, the top-level members recruit the new members and the payments that are made are used to pay “upfront costs” to the recruiters up to the top levels of the chain. The new members bring in new recruits further, and the fees received is passed up to the upper levels of the chain, till a point is reached when this is no longer able to sustain the scheme. Pyramid schemes are also of different kinds like Multi-level Marketing, chain emails, Ponzi schemes and so on.
Brazilian courts have already been looking into various cases of pyramid schemes, for instance, a Rio de Janeiro court had ruled in favor of a client of the company Unick Forex, asking the latter to pay a sum of 28,500 US dollars to the client. The client had filed a lawsuit against the investment scheme for moral damages and delay in platform withdrawals, reportedly. It was further said that the court had passed a “default judgment” when the party against which the lawsuit (Unick Forex in this case) has been filed failed to show up to defend itself. Other courts in Brazil like the State Court of Justice, Sao Paulo has also been pursuing certain firms dealing with crypto assets and has also made a “block request” to Atlas Quantum as well as other companies trading in Bitcoin and cryptocurrency. The courts are also looking for crypto assets belonging to Miner which again like Atlas Quantum is alleged to be a financial pyramid scheme.
The crypto exchange platform which had already suffered a major data breach last year around August claimed that the court has not given a real deadline to them to clear the late withdrawals and resolve their issues. It has further claimed that they are not ready to accept the court’s verdict which poses them like a pyramid scheme, and has reportedly said, “ We are fully focused on resolving the issues at hand.”
Atlas Quantum was launched in 2015 in Brazil by Rodrigo Marques, and the CEO seems to have recorded a video to demonstrate a hold over the withdrawal crisis looming large in this crypto exchange’s face.