The Brazilian Federal Police have arrested several members and the leader of Bitcoin Banco Group, a company that embezzled investors' funds in the name of cryptocurrency investment.
The official press release on Monday detailed that the action against the allegedly fraudulent company by law enforcement was taken after a three-year-long investigation. It has also led to the arrest of Cláudio Oliveira, better known as ‘The Bitcoin King’, who was the President of Bitcoin Banco Group.
The company is believed to have scammed more than 7,000 investors out of at least 1.5 billion Brazilian reais (about $300 million).
Bitcoin Banco Group gained popularity during the cryptocurrency boom and managed to gather funds from thousands of investors by promising massive gains on investments. However, by the end of 2019, the company said the 7,000 Bitcoins under its custody had disappeared and thus ceased client withdrawals.
Instead of going into bankruptcy, the company applied for a judicial recovery order that enabled it to reorganize its finances and administration to pay creditors. Despite the troubles, the controversial company continued to offer services but did not explain the sudden disappearance of its funds.
Law enforcement thinks that the fraudulent activities of the company started in 2019 based on the numerous complaints filed by possible victims.
A Large Scale Operation
In the so-called ‘Operation Daemon’, around 90 federal police officers are involved in investigating Bitcoin Banco Group’s bankruptcy crimes, embezzlement, Money Laundering and criminal organization structure. Along with the arrests, the authorities searched and seized properties.
Furthermore, the Brazilian police detailed that multiple foreign agencies, including the ones in the United States and Europe, investigated Oliveira for similar crimes.
Meanwhile, one of the largest Bitcoin frauds took place in South Africa that embezzled investors of $3.6 billion in cryptocurrencies. The masterminds of the scam disappeared with all the investors’ funds.
