U.S. authorities have just seized millions of dollars in crypto from one of Brazil’s biggest and most famous scams, ending one dark chapter in the history of crypto scams in the country.
The joint initiative —started by the brazilian authorities— had the codename “Operation Egypt” (did you understand the reference?) and aimed to end a scam of more than $200 million that gained high popularity in Brazil since its founding in 2017 and had already claimed at least 23.200 victims.
Shutting Down One of Brazil’s Largest Crypto-Frauds
According to an official announcement by the United States Department of Justice, authorities could confiscate $25 million in crypto stored by the criminals in a financial institution —probably some exchange or custodial service. They did not reveal the name of the said institution. Still, They confirmed it was as cooperative as possible with authorities during their investigation.
The DOJ explained that Operation Egypt’s success was thanks to a multidisciplinary effort between Brazil’s Authorities and American Agencies and the custodial entity with access to funds stored by criminals:
The U.S. Department of Justice’s Money Laundering and Asset Recovery Section (MLARS) International Unit and Office of International Affairs are working in close cooperation with the Brazilian authorities, the FBI Legal Attaché in Brasilia, the FBI in Boston, the FBI’s Virtual Currency Evolving Threat Working Group, and the U.S. Marshals Service to restrain the virtual currency and preserve it for forfeiture proceedings pending in Brazil to compensate the investors victimized in this fraudulent investment scheme.
The cryptocurrency firm holding the accounts cooperated with law enforcement authorities in executing this seizure.
How The Operation Worked
Operation Egypt’s investigations targeted InDeal, a fraudulent pyramid scheme running in Brazil since 2017, which promised investors returns of up to 15% after one month of investment.
The criminals asked for a payment in cryptocurrency, and the company was supposed to invest the funds in other crypto assets. However, this did not always happen, and a large part of the money went into the scam artists’ pockets. According to local sources, some of the 15 members of the team under investigation raised their worth by as much as 100X.
The Justice Department explained that Marco Antonio Fagundes —one of the masterminds behind the whole operation—failed to comply with brazilian regulations as a financial service provider. In addition, he offered high ROI for those who bet on cryptocurrency products. However, a court from Brazil found that very little returned to investors, as Fagundes and his team came up with “false and inconsistent promises,” lying about the way they were administrating the investors’ funds, all with the intention to get away with it and keep the scam running.
Latin America is Under the Microscope
The law enforcement agencies did not provide more details about the operation; however, they explained that the heads of the operation will face charges of operation of a financial institution without legal authorization, fraudulent management of a financial institution, misappropriation, and money laundering, as well as Brazil’s securities law violations.
A recent report by the cyber intelligence company IntSights claimed that criminals in Brazil and other parts of Latin America used digital currencies to launder money, and other US agencies have the region on their radars due to the increase in cryptocurrency adoption.