By Dan Byrne for AMLi
US AUTHORITIES have seized over $24 million in virtual assets following an official request by the Brazilian government, who are pursuing the culprits of a major cryptocurrency fraud scheme.
Dubbed ‘Operation Egypto’ by Brazilian authorities, the seizures come as a major clampdown on an operation thought to have defrauded tens of thousands of Brazilian citizens and resulted in illegal gains of over $200 million.
The funds seized were tied to Brazilian national Marcos Antonio Fagundes, the US DoJ said in a statement.
Fagundes is understood to have solicited funds from potential clients through various media including phone calls and the internet.
The funds were touted as cryptocurrency investments in companies that Fagundes and his associates controlled.
However, these claims were found to be false, inconsistent and exaggerated.
Little of the invested money was exchanged into the promised cryptocurrencies or invested in companies, and an even lesser amount was returned to the client in the end.
Additionally, Fagundes and his associates held the funds in a way that would classify them as a financial institution under Brazilian law. But they did little to comply with the applicable regulations in this capacity.
“Fagundes is charged with several criminal violations of Brazilian law, including, among other offenses, the operation of a financial institution without legal authorization, fraudulent management of a financial institution, misappropriation, and money laundering,” the DoJ statement read.
A Brazilian court is understood to have issued the seizure order, with which the US duly complied owing to a treaty of Mutual Legal Assistance in Criminal Matters between the two nations.
The operation in the US is being handled by the DoJ’s Money Laundering and Asset Recovery Section (MLARS).
They are working with other authorities such as the FBI to hold the seized funds in reserve until forfeiture proceedings conclude in Brazil to decide their fate – which will likely involve compensation for those originally defrauded.
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