Crypto related frauds continue to be a headache for the market. Another one pops out its head from Brazil, where a fake cryptocurrency scams over 55,000 investors. The estimated fraud value is said to be over $200 million.
The primary for crypto scams has been the lack of awareness among investors. Scammers take advantage of this by wooing them to invest in exaggeration schemes, which result in serious losses. In the current case, an unlicensed crypto company lured investors by promising them a 15% return on investment. The crypto crime cartel worked as a financial institution, even without authorization from the Brazilian Central Bank.
According to the Federal Revenue Service, the governing financial body of Brazil, informed that till February 2019, the fraudulent company managed to raise over $210 million from the would-be investors. It also indicated that the total raised funds could be around $250 million.
The cartel was busted by a joint undercover operation, Operation Egypto, by the Federal Police department and the Federal Revenue Agency. The agencies raided at over 25 points in over eight cities, while executing ten arrest warrants.
This, however, isn’t the first time that a crypto-related crime has been uncovered in Brazil. Earlier this year, the Federal Police arrested a man for alleged drug trafficking and money laundering with Bitcoins.
Operation Egypto officers stated that though crypto trading isn’t illegal in the country, the accused were running the company without authorization. The operation also discovered that the company was not investing the money in cryptocurrencies, instead of putting it in low-yield and fixed investments. The accused allegedly spent most of the money on luxury items like cars, real estate, jewelry, etc.
The accused are also being probed for other criminal activities, usually attributed to crypto frauds, which include money laundering, financial misappropriation, criminal organizations, etc.