Brazilian Authorities Collaborate With U.S. HSI to Nab Crypto Criminals

Joint investigative efforts put forth by Brazilian Federal Police and the United States Homeland Security Investigations (HSI) with support from several other law enforcement agencies have led to the discovery of an international digital assets fraud scheme. Together, they intercepted a transnational cryptocurrency fraud ring in Curitiba, Brazil a few days ago.

The group was responsible for siphoning up to 4 billion reais which are approximately $768 million through the banking system alone by deceiving unsuspecting crypto players to invest in cryptocurrencies that turned out to be valueless. This is besides the proceeds that were transferred as cryptocurrencies. According to a document released by the U.S Immigration and Customs Enforcement (ICE), 

“The U.S. investigation revealed that the organization allegedly deceived investors in over a dozen countries by falsely claiming that they had developed fully functioning, cutting-edge cryptocurrency-related financial products. In reality, the organization is suspected of advertising fraudulent partnerships and licenses that were used to dupe victims into investing millions into cryptocurrencies minted by the suspects. The cryptocurrencies eventually held little to no value.”

Operation Poyais in Brazil 

This discovery was made in a raid known as Operation Poyais, named after Gregor MacGregor, a nineteenth-century Scotsman and confidence trickster.

The Brazilian Federal Police conducted over 20 searches with seizure warrants in Parana, Santa Catarina, São Paulo, and Rio de Janeiro, Brazil. In the end, the authorities saw that the criminals had violated Brazilian laws centered around international money laundering, operating a criminal enterprise, fraud, and crimes against the national financial system. 

The crypto fraud ring was led by a 37-year-old Brazilian national who formerly resided in the  U.S. and was identified as Francisley Valdevino da Silva. At the beginning of this year, after he moved to Brazil, the U.S HSI agent contacted the Brazilian Federal Police requesting assistance in rounding up the fraud ring.

Other contributing law enforcement entities are HSI New York El Dorado Task Force, HSI Brazil, HSI Orlando, the New York City Police Department, the New York City Sheriff’s Office, and the State of Florida’s Office of Financial Regulation.  

Meanwhile, Brazilian regulators have proposed stricter laws and regulations for virtual assets. They plan to increase the penalty for violating financial crime laws. Similarly, Brazil’s Securities and Exchange Commission is trying to make adjustments to its crypto legal regulatory framework.