The president of Bitcoin Banco Group, a Brazilian Bitcoin brokerage firm, Claudio Oliveira, also known as “Bitcoin King” has been arrested, facing charges of bankruptcy, embezzlement, operating a criminal organization in Brazil, and money laundering.
The firm rose to fame with its exorbitant returns that lured tens of thousands of investors. In May 2019, Bitcoin Banco Group came under suspicion after announcing that its platform had been hacked, but failed to back its claim with convincing evidence. A former client, therefore, filed a lawsuit against the firm. The court then ordered Oliveira and his team to provide evidence of the alleged hack on June 6. In July, the firm settled with the plaintiff according to multiple reports.
The alleged hack affected about 20,000 customers. By September, over 200 lawsuits had been filed against the firm by angry investors. The court then issued an order to freeze its account.
Bitcoin Banco Group president claimed 25,000 BTC
Bitcoin Banco Group later revealed that 7,000 Bitcoins in investor funds disappeared, and filed for a Judicial Recovery with a bankruptcy court in Curitiba, to settle on an agreement with authorities to avoid bankruptcy by exploring possible means to repay creditors.
The firm, however, ignored its obligation with the bankruptcy court by failing to repay creditors as it resumed its usual business operation. Bitcoin Banco Group allegedly continued to convince more customers by introducing a “public collective investment contract”. This was to convey the idea that it had not registered with the Brazilian Commission of Securities.
The attorney of the affected investors pointed out that the amount shown by the audited data is much different from the amount quoted by the company. In addition, the firm failed to provide wallet data that could possibly settle the case.
“Operation Daemon”, which included about 90 federal police officers from Curitiba and the metropolitan region, discovered that the group had embezzled R$1.5 billion (US$300 million) through an investigation that lasted for three years. A tax return from 2018 which was leaked also revealed that the president of the firm had claimed about 25,000 BTC as well as 14 properties in Brazil and other assets.
Other members of the Bitcoin Banco Group were then served with one preventive arrest warrant, four temporary arrest warrants, as well as 22 search and seizure warrants. It was also reported that Oliveira had engineered similar schemes in the US and Europe.