Self-described “Bitcoin King” Claudio Oliveira has been arrested and charged by Brazilian federal police for allegedly masterminding a 1.5-billion reals (roughly $300 million) fraud scheme involving crypto.
Oliveira served as the president of Bitcoin Banco Group, a Brazilian crypto brokerage firm that has been under investigation since 2019 claiming to have lost 7,000 Bitcoin (BTC) in investor funds.
According to a rough translation of a Monday press release, federal police from the Curitiba Metropolitan Region served Oliveira and other members of Bitcoin Banco Group with one preventive arrest warrant, four temporary arrest warrants, and 22 search-and-seizure warrants.
Bitcoin Banco Group reportedly lured investors with promises of exorbitant daily returns. According to police, alarm bells first began ringing early in 2019 when the platform started blocking withdrawal requests.
The platform claimed it was hacked in May 2019 but reportedly failed to provide evidence to support the claim. On Tuesday, a judge ordered the firm to provide evidence of the hack after a former client filed a lawsuit against the firm. The firm settled with the plaintiff in July.
By September, its accounts had been frozen by the courts as it faced more than 200 lawsuits from disgruntled investors, with the incident estimated to have impacted more than 20,000 investors.
As a result of the alleged hack, Bitcoin Banco Group filed for judicial recovery — an agreement with local authorities to reorganize finances and pay creditors to avoid bankruptcy — with a bankruptcy court in Curitiba.
Despite Bitcoin Banco Group filing for judicial recovery, the firm reportedly operated the business as usual and neglected its obligations with the bankruptcy court — including failing to repay creditors. The platform even continued to seek new customers, launching “public collective investment contracts” that it had not registered with the Brazilian Commission of Securities.
The investigation into Bitcoin Banco Group, dubbed “Operation Daemon,” found that investors’ funds had been “diverted according to the interests of the criminal organization leader.”
A leaked tax return from 2018 showed that Oliveira had then claimed 25,000 BTC and 14 Brazilian properties among his assets.
Oliveira is facing charges of bankruptcy crimes, embezzlement, money laundering and operating a criminal organization in Brazil.
The investigation also found that the “Bitcoin King” may have operated similar schemes in the United States and Europe.
Sourced from cointelegraph.com.
Written by Brian Quarmby on 2021-07-06 05:22:42.