Brazilian ‘bitcoin king’ arrested in an alleged $300 million embezzlement case

Police in Brazil hold a press conference about an investigation into a bitcoin scam.
Brazilian police discuss the July 2021 arrests of people involved in an alleged bitcoin scam.

  • Police in the Brazilian state of Parana have arrested several people for their alleged involvement in a bitcoin scam.
  • A self-proclaimed ‘bitcoin king’ was among those arrested over the scheme after a three-year investigation.
  • The alleged scam harmed thousands of customers of a crypto brokerage firm, police said.
  • See more stories on Insider’s business page.

A self-proclaimed “bitcoin king” in Brazil is among those arrested by police in a case accusing the group of running a $300 million embezzlement scheme.

The arrests follow a three-year investigation in the southern Brazilian state of Parana that was conducted by 90 federal officers. Police outlined the case in a Monday press conference, including the arrest of Claudio Oliveira, the so-called “Bitcoin King” who was the alleged ringleader in the theft of 1.5 billion Brazil reais ($300 million) from investors. Several other people were arrested, according to CoinDesk.

Authorities said Oliveira was the president of a crypto brokerage, Bitcoin Banco Group, which in 2019 claimed that 7,000 bitcoin had gone missing. The group then fraudulently applied for judicial recovery, a type of exemption that allows an entity to pay creditors without filing for bankruptcy, according to the CoinDesk report.

But in 2020, it was determined that the group wasn’t complying with its obligations under the judicial reorganization. According to a translated press release, police said the group continued to bring in new customers and promote its business activities without registering with the country’s Commission of Securities, known as the CVM.

The group is suspected of entering into irregular contracts with thousands of customers, according to the press release about “Operação Daemon,” or Operation Daemon.

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Two South African brothers have vanished with $3.6 billion of bitcoin in what could be the biggest crypto heist in history

Bitcoin golden physical coin illustration on dark black background with reflection.

Two South African brothers recently vanished with $3.6 billion worth of bitcoin in what could potentially be the biggest cryptocurrency heist in history.

Local media, including Independent Online and ITWeb, were the first to report on the case.

In 2019, Ameer Cajee and his younger brother, Raees Cajee, founded crypto investment app Africrypt.

Not long after, the siblings, along with 69,000 bitcoins worth roughly $4 billion at their April peak, are nowhere to be found.

It all began in April when Ameer, who is the company’s chief operating officer, informed their clients that Africrypt was hacked, compromising their accounts, wallets, and nodes.

In an unusual step, 20-year-old Ameer told them not to report the incident to authorities as this would impede attempts to recover the funds.

A few suspicious customers, however, did report the hack. They contacted Hanekom Attorneys, according to Independent Online, who then tried to track the brothers down. When unsuccessful, Hawks, a police unit in South Africa that targets crime and corruption, was looped in.

“We were immediately suspicious as the announcement implored investors not to take legal action,” Hanekom Attorneys told Bloomberg over email. “Africrypt employees lost access to the back-end platforms seven days before the alleged hack.”

The lawyers also told cryptocurrency exchanges around the world to sound an alarm if they noticed any suspicious conversion of coins.

FNB, which banked Africrypt, has also been questioned about the episode, according to documents seen by Independent Online. The local bank denied any involvement.

“FNB once again confirms that it does not have a banking relationship with Africrypt. Due to client confidentiality, FNB cannot provide any information on specific bank accounts,” Nadiah Maharaj, FNB risk spokesperson, told Independent Online.

As the brothers remain missing, some efforts to get to the bottom of things have hit roadblocks.

For instance, South Africa’s Finance Sector Conduct Authority, the country’s financial institutions regulator, said cryptocurrency-related matters do not fall under its jurisdiction, Independent Online reported.

Crimes involving crypto are a growing cause of concern for regulators and companies.

Most recently, the Bank for International Settlement criticized the digital asset for its role in illegal activities.

“By now, it is clear that cryptocurrencies are speculative assets rather than money, and in many cases are used to facilitate money laundering, ransomware attacks, and other financial crimes” BIS said.

US Treasury Secretary Janet Yellen, meanwhile, has also been a vocal critic of cryptocurrencies.

“To the extent it is used, I fear it’s often for illicit finance,” she said in February. “I do worry about potential losses that investors can suffer.”

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