DoJ seizes $24M in digital currency from alleged Brazilian scammer

The U.S. Department of Justice has seized $24 million worth of cryptocurrencies from an alleged Brazilian scammer. The DoJ was acting upon a request from the Brazilian government which has been pursuing the suspect accused of defrauding $200 million from investors.

Announcing the seizure via a press release, the Department revealed that the digital currencies were tied to Marcos Antonio Fagundes. Fagundes is facing charges that include fraudulent management of a financial institution, securities laws violations, misappropriation and money laundering and operating a financial institution without legal authorization.

The DoJ made the seizure following a request from the Brazilian government under “the Treaty between the United States of America and the Federative Republic of Brazil on Mutual Legal Assistance in Criminal Matters.”

Fagundes, together with other co-conspirators, allegedly lured tens of thousands of investors from August 2017 to May 2019 to invest in a purported digital currency product. They used the Internet to target their victims, combining it with telephone calls and other marketing means. Brazilian authorities said Fagundes and his team received the investment in Brazilian reals and digital currencies, promising to invest in “an innovative investment opportunity.”

Following investigations, Brazilian authorities discovered that only a very small amount of the funds was invested in digital currencies. The fraudsters made false and inconsistent promises to investors about how they were investing the funds and exaggerated the rates of return.

In pursuing Fagundes and his gang, Brazilian authorities had traced some of the stolen funds to an unnamed digital currency firm based in the United States. The District Court of Columbia issued a seizure order for the funds, and the digital currency firm holding the funds cooperated with authorities in executing the order.

As CoinGeek reported, Brazilian authorities cracked down on the scam in May 2019. The scammers had promised a guaranteed 15% return for their investors, attracting over 55,000 people. Under Operation Egypto, the Brazilian Federal Police and the Federal Revenue Agency managed to dismantle the crime cartel, executing 10 arrest warrants and 25 search and seizure orders in eight cities.

See also: CoinGeek Live panel on The Future of Exchanges & Trading in a Tokenized World