U.S. Authorities Seize $24 Million in Crypto Linked to Scam

Referred to as “Operation Egypto,” the investigation was led by Brazilian authorities with American law enforcement aid. It succeeded in tracking down several suspects, including alleged ringleader Marcos Antonio Fagundes. According to a press release from the U.S. Department of Justice (DOJ), Fagundes, a Brazilian national, has been charged with a slew of crimes, including the operation of a financial institution without legal authorization, fraudulent management of a financial institution, money laundering, and the violation of securities law.

The Crypto Bait and Switch

The DOJ document alleges that between 2017 and 2019, Fagundes and his co-conspirators solicited investments from victims online, often dangling the possibility of crypto in front of them. These people would then send their money—either in the form of Brazilian Reals or cryptocurrency—much of which was then diverted directly into the pockets of the scheme’s architects. “To carry out the scheme, the conspirators are alleged to have made false and inconsistent promises to investors about the way the funds were invested and exaggerated the rates of return,” the press release read. According to estimates from the Brazilian government, more than $200 million was obtained by Fagundes using this strategy. All told, “tens of thousands” of Brazilians may have been victimized. As part of Operation Egypto, Brazil authorities went after the financial assets, seizing real estate, luxury vehicles, high-class jewelry, and an undisclosed amount of cash. As for the DOJ’s involvement, they were enlisted to help seize any virtual currency “owned or controlled” by Fagundes in the U.S.

A Familiar Pattern

There have been countless fraud cases wherein the perpetrators used cryptocurrency to defraud investors, attract victims, or launder money. Fagundez’s case is simply the latest. The investigation remains ongoing. However, Brazilian and U.S. authorities intend to hold the crypto to:

“preserve it for forfeiture proceedings pending in Brazil to compensate the investors victimized in this fraudulent investment scheme.”