According to the Brazilian regulator CVM, Bitcoin Bank Group does not show favorable behavior. A judge ordered an investigation into the group for alleged “sophisticated fraud.”
Bitcoin Bank Group submitted a request to the Brazilian Securities and Exchange Commission (CVM) so that the regulator would reactivate its activities. In 2019, the auditing entity had ordered the cessation of its operations. The regulator argued that there was no evidence of a change in behavior or a compensation plan for the affected users without access to their allegedly hacked funds.
The CVM debated on August 11th the request that Claudio José de Oliveira and Johnny Pablo Santos made. Both are representatives of the firms Bitcurrency Moedas Digitais S.A. and CLO Participações e Investimentos S.A., belonging to the aforementioned group. On August 12th, the commission issued a press release rejecting the proposal.
The regulatory authority stated that “there was a legal impediment to the implementation of the agreement since there was no evidence of the termination of the behavior nor any proposal for compensation for the losses caused to the investors. Considering the seriousness of the accusation, the Committee on Commitment suggested the rejection of the request”.
Last year, the CVM halted the group’s operations because the entity was not registered to trade securities. Besides, the group was promising to generate income by conducting arbitrage with Bitcoin and alleged cryptocurrency brokers. However, the users began to report that they could not make withdrawals from the platforms.
At that time, the entity reported that a group of hackers had allegedly stolen the bitcoins from the operators. As a desperate measure to recover their funds, the users began to sue the group’s companies.
In the proposed agreement that it submitted to the CVM, the group offered to stop the offers but did not convince the authorities. With the decision, Bitcoin Bank Group remains unauthorized to conduct operations.
Ups and Downs of the Bitcoin Bank Group
Claudio José de Oliveira came to be known as the “King of Bitcoin” due to the space that the group gained among Brazilian users. After the CVM intervened, Bitcoin Bank Group got a fine of BRL 100,000 per day (equivalent to around USD 18,000) if it did not stop the promotion and its operations.
At the end of 2019, Bitcoin Bank Group went bankrupt, leaving hundreds of users in limbo. According to reports, there are people at risk of losing their homes after mortgaging them and investing funds that they are now unable to recover.
One user even decided to kidnap Oliveira’s mother and sister-in-law demanding a ransom in bitcoins to free the women. The businessman did not have to make the payment as the local police managed to rescue the victims.
The CVM’s decision confirms the blocking of the group’s operations, which also has frozen properties in several Brazilian cities and lawsuits in seven states. A judge even ordered an investigation into the organization for alleged “sophisticated fraud”.
By Alexander Salazar
