Pyramid scheme Indeal had reportedly raised a total of USD 200 million. The company misled investors by promising false gains in Bitcoin.
In recent days, the US Department of Justice seized USD 24 million worth of Bitcoin on behalf of the Brazilian government. This is part of the money that thousands of people invested in a pyramid scheme that operated in Brazil for almost two years.
On November 4th, the US agency published a note indicating that they obtained the seizure following an official request from the Brazilian government. They did it based on the existing treaty between the United States and the Federative Republic of Brazil on mutual legal assistance in criminal matters.
They apply the cooperation agreement within the framework of an investigation called Operation Egypt. The Federal Police and the Internal Revenue Service (IRS) are advancing it in the South American country. The company Indeal managed to raise more than USD 200 million from its investors. The Brazilian authorities classified it as a fraudulent pyramid scheme.
The Department of Justice thus proceeds to seize the Bitcoin that Brazilian citizen Marcos Antonio Fagundes, Indeal’s main operator, keeps in the United States. They do this based on the seizure order that the Brazilian court issued, and Judge Trevor N. McFadden accepted in the District of Columbia, USA.
According to the note, the US cryptocurrency firm, in which Fagundes opened his accounts, cooperated with law enforcement authorities to make the seizure. No one knows yet the name of the platform that serves to store the Bitcoin.
To advance the seizure process, the FBI Legal Attaché in Brasilia, the FBI in Boston, the FBI Working Group on Evolving Threats with Virtual Currencies, and the US Marshals Service work jointly with the Brazilian authorities.
When Brazil receives the money, they will use it to compensate the victims of the pyramid scheme. These USD 24 million would add to about USD 170,000 recovered through the auction of some other assets belonging to those involved in the fraud.
More Than 50,000 Investors Expected to Make a Profit in Bitcoin
The launch of Operation Egypt occurred in May 2019 to discover how Indeal is working. Fagundes and four partners operated the financial institution without authorization from the Central Bank of Brazil, raising funds from third parties without legal permission.
At that time, local media explained that there were preventive arrest warrants against the owners and employees. Besides, the authorities searched for and seized the money and property in the hands of those involved. Fagundes was among those who went to prison, but they released him months later on habeas corpus. He now has to face multiple lawsuits.
The headquarters of the company was in Novo Hamburgo, in the southeast of the country. Besides, it operated between August 2017 and May 2019. According to Brazilian authorities, it attracted around 55,000 customers interested in making a profit in Bitcoin from all over the country.
The public received promises of innovative investment opportunities from the scheme through the Internet. The operators attracted the public’s money by telling them that they would invest it in cryptocurrencies, claiming that they would have returns of more than 15%. However, Brazilian authorities determined that they only invested a very small amount of the funds in Bitcoin and returned very little money to investors.
According to the investigations, the partners used most of the money to purchase real estate, luxury cars, precious stones, and other types of property. For this reason, those involved received charges of handling fraud, financial misappropriation, money laundering, and organization to commit a crime.
By Alexander Salazar
