US Department of Justice Seizes $24m in Cryptocurrency Linked to Major Online Fraud Scheme
The US Department of Justice (DoJ) has seized $24m of cryptocurrency in connection with a major online fraud scheme dubbed “Operation Egypto.” The Brazilian authorities estimate that the scheme netted scammers $200m after tens of thousands of Brazilians were tricked into investing.
Details of the Scheme
Between August 2017 and May 2019, Brazilian Marcos Antonio Fagundes and several conspirators are alleged to have persuaded victims in person, over the phone and online to put their money into “innovative investment opportunities.” In reality, the funds are said to have been channelled to businesses they owned, with only a small amount actually invested into cryptocurrency, and with few returns for the victims. The conspirators are said to have exaggerated the expected rates of return and made false promises about the way funds were invested.
Seizure of Funds
The $24m located in the US was seized at the request of the Brazilian government and is said to belong to Fagundes. The operation involved the work of the DOJ’s Money Laundering and Asset Recovery Section (MLARS) International Unit and Office of International Affairs, alongside the Brazilian authorities, the FBI Legal Attaché in Brasilia, the FBI in Boston, the FBI’s Virtual Currency Evolving Threat Working Group and the US Marshals Service.
Previous Scams Uncovered
It’s by no means the first scam of its kind to have been uncovered by the authorities. In December 2019, three men were charged with a conspiracy to defraud investors out of at least $722m after selling shares in a cryptocurrency mining operation they allegedly knew to be unprofitable. In that same month, the SEC charged a US entrepreneur with defrauding investors, after alleging pocketing some of their payments which should have gone into a $42m cryptocurrency Initial Coin Offering (ICO).
Expert Opinion
The $24m recently seized by the DoJ is a “drop in the ocean” given the scale of cryptocurrency scams today, argued ImmuniWeb founder, Ilia Kolochenko. “Nonetheless, the operation is a laudable success and convincingly demonstrates that cooperation between international law enforcement agencies and joint task forces brings notable results,” he added.