Claudio Oliveira, Brazil’s ‘Bitcoin King,’ filed for his crypto brokerage’s bankruptcy in 2019 after claiming the firm was hacked. The Brazilian federal police arrested and charged the self-described ‘Bitcoin King’ for his role in masterminding a 1.5 billion reals fraud scheme involving crypto. The scheme is estimated to be roughly worth $300 million.
The fraudster served as the president of a Brazilian crypto brokerage firm, Bitcoin Banco Group, which has been under investigation since 2019. The Brazilian federal police launched an investigation after claims of the firm losing 7,000 Bitcoin (BTC) in investor funds.
A roughly translated Monday press release from the Brazilian government, asserted that federal police from the Curitiba Metropolitan Region served members of Bitcoin Banco Group, including Oliveira, with 22 search-and-seizure warrants, one preventive arrest warrant, and four temporary arrest warrants.
Investors were reportedly lured into Bitcoin Banco Group with promises of outrageous daily returns. The federal police affirmed that it was early in 2019 when alarm bells began ringing after withdrawal requests got blocked on the firm’s online platform.
The crypto brokerage claimed its platform was hacked in May 2019 but had no evidence to back these claims. A judge ordered Bitcoin Banco Group to provide evidence of the alleged hack on Tuesday after a former client filed a lawsuit against them. The firm chose to settle with the plaintiff outside court in July.
The courts froze the firm’s accounts By September, as more than 200 disgruntled investors filed lawsuits. The magnitude of their fraudulent activities was far-reaching as it was estimated to impact more than 20,000 investors. Due to this alleged hack, the firm decided to file for judicial recovery with a bankruptcy court in Curitiba. This is an agreement with local authorities for the firm to reorganize their finances and pay creditors to steer clear of bankruptcy.
Business as Usual Despite Judicial Recovery Agreement
Regardless of them having filed for judicial recovery, Bitcoin Banco Group kept operating as usual and did not honor the agreement made with the bankruptcy court – this included failure to repay creditors. It was business as usual at the firm with them even launching ‘public collective investment contracts.’ This launch was contrary to the laws of Brazil as it had not registered it with the Brazilian Commission of Securities.
The ‘Bitcoin King’ is facing charges of embezzlement, operating a criminal organization in Brazil, bankruptcy crimes, and money laundering. The investigation unearthed possibilities of Oliveira having operated similar operations in Europe and the United States.
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