On September 21, according to local publication G1, Brazil’s Civil Police took down a pyramid scheme based on a fake digital currency dubbed Kriptacoin. In Goiâna and Distrito Federal, 11 suspects were arrested for commercializing the false currency, and two are still at large. 18 search warrants have been issued.
Civil Police took down the pyramid scheme, which involved over $79 million in investments from over 40,000 people, in an operation dubbed “Operação Patrik.” Three companies, among the one named Kriptacoin, managed the scheme. Police seized eight luxury cars, and reports suggest a helicopter was blocked in the national aviation agency’s systems, although it hasn’t yet been located.
According to investigators, the scheme was created late last year, and launched in January this year. The organization’s members pretended to be executives and promised victims returns up to 1% a day, although they could only cash out after a year.
Real earnings, however, would come from recruiting other members. If a victim got someone else to invest in the digital currency Kriptacoin, that person would get a 10% bonus – per recruited investor. Investors had to sign up and pay for their Kriptacoin through a digital platform, using fiat currency.
To legitimize the pyramid scheme and make it look like a real investment opportunity, the scheme’s organizers scheduled various meeting and ran advertising campaigns both online and on television. On social media, the three companies marketed their product with pictures of celebrities.
According to police, one victim invested about $63,000 and got no return on his investment. When trying to recoup its losses, the person was threatened by company “executives” trying to keep the money.
The companies that ran the scheme were well-organized organized and forged documents to get what they wanted. All three companies involved in the scheme had been identified as companies whose declared property doesn’t match known financial transactions.
Moreover, three of the suspects were well-known to police due to various offences, including forgery, threats, attempted theft, possessing illegal weapons, DUIs, and property damage. A lawyer representing one of the scheme’s companies, Wall Street Corporate, stated that Kriptacoin wasn’t a pyramid scheme, and that the facts would be proven.