JAKARTA - Claudio Oliveira who calls himself the “King of Bitcoin”, Monday 5 July has been arrested and charged by the Brazilian federal police. He is suspected of masterminding a fraud scheme totaling 1.5 billion rials or about 300 million US dollars involving cryptocurrencies.
Oliveira is the President of Bitcoin Banco Group, a crypto brokerage firm in Brazil who has been under police investigation since 2019 for claiming to have lost 7,000 Bitcoins (BTC) in investor funds.
According to a press release, federal police from the Curitiba Metropolitan Area last Monday detained Oliveira and other Bitcoin Banco Group members, on a preventive arrest warrant. Four temporary arrest warrants were issued for the chairman of Bitcoin Banco Group. There were also 22 search and seizure warrants.
Bitcoin Banco Group has reportedly lured its investors with the promise of exorbitant daily profit returns. According to the police, the alarms first started sounding in early 2019 when their platform started blocking withdrawal requests from investors.
The platform claimed to have been hacked in May 2019 but they failed to provide any evidence to support the claim. On Tuesday, July 6, a federal judge ordered the company to provide evidence of the hack, after their former client filed a lawsuit against the company. The company is required to settle the matter with the plaintiffs this July.
As of September 2020, their accounts had been frozen by the courts as they faced more than 200 lawsuits from disgruntled investors. The incident is estimated to have affected more than 20,000 investors.
As a result of the alleged hack, Bitcoin Banco Group filed for judicial reparation, which is an agreement with local authorities to reorganize finances and pay creditors to avoid bankruptcy. The agreement was made with the bankruptcy court in Curitiba.
Even though Bitcoin Banco Group filed for judicial remedies, the company reportedly continued to do business as usual and ignored its obligations ordered by the bankruptcy court, including defaulting on creditors.
The platform even continues to seek new customers, and launches “public collective investment contracts” that are not yet registered with the Brazilian Securities Commission.
An investigation into the Bitcoin Banco Group, dubbed the “Operation Daemon,” found that investor funds had been “diverted in the interests of the leaders of criminal organizations.”
Leaked tax reports from 2018 show that Oliveira later claimed 25,000 BTC and 14 Brazilian properties as his assets.
Oliveira is now facing criminal charges of bankruptcy, embezzlement, money laundering and operating criminal organizations in Brazil. The investigation also found that the “Bitcoin King” may have operated similar schemes in the United States and Europe.
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