CABO FRIO, Brazil (AP) — In April, Brazil’s federal police stormed the helipad of a seaside resort in Rio de Janeiro state, the place they busted two males and a lady loading a chopper with 7 million reais ($1.3 million) in neatly packed payments.
The detainees instructed police they labored for G.A.S. Consulting & Expertise, a cryptocurrency funding agency based by a former waiter-turned-multimillionaire who’s the central determine in what’s alleged to be one among Brazil’s biggest-ever pyramid schemes.
Police say the corporate owned by 38-year-old Glaidson Acácio dos Santos had complete transactions value a minimum of $7 billion ($38 billion reais) from 2015 by means of mid-2021 as a part of a Bitcoin-based Ponzi scheme that promised buyers 10% month-to-month returns.
In lots of of pages of paperwork obtained by The Related Press, federal and state police and prosecutors accuse dos Santos of operating a classy racket defrauding hundreds of small-scale buyers who believed they have been getting wealthy off Bitcoin’s steep appreciation. He’s now in a Rio jail awaiting trial on expenses together with racketeering, monetary crimes and ordering the homicide and tried homicide of two enterprise opponents. He stays underneath investigation within the tried homicide of a 3rd competitor.
Dos Santos has repeatedly asserted his innocence. His legal professionals didn’t reply to AP requests for remark.
Regardless of the fees, dos Santos represents an unlikely hero to supporters. Many view him as a modest Black man whose unorthodox Bitcoin enterprise made them rich by gaming a monetary system they consider is rigged by rich white elites.
The case additionally underscores the fast-growing urge for food for cryptocurrencies in Brazil, the place years of financial and political crises have made digital currencies a beautiful defend in opposition to depreciation of the Brazilian actual and double-digit inflation.
Bitcoin fervor was excessive in Cabo Frio, the resort city the place G.A.S. was primarily based. As G.A.S. revenues rose, enriching early adopters, copycat corporations sprang up, looking for to money in. A wave of cryptocurrency-related violence adopted.
With so many alleged pyramid schemes, Cabo Frio got here to be referred to as the “New Egypt.” And because the city’s prime canine, dos Santos was dubbed the “Bitcoin Pharaoh.”
Police say dos Santos started buying and selling in Bitcoin in 2014 after leaving his job as a waiter. He enlisted purchasers from the Common Church of the Kingdom of God, the place he had as soon as skilled as a preacher, promising referral charges to those that introduced in recent recruits, authorities say.
In an announcement, the Common Church accused dos Santos of “harassing and recruiting” pastors and their flocks to affix his firm.
By 2017, dos Santos was making severe cash — and attracting authorities’ consideration. That yr his firm’s transactions totaled 10 million reais ($1.8 million), 15 occasions greater than the earlier yr. The nation’s monetary intelligence unit additionally seen the corporate — registered as a restaurant — was repeatedly buying and selling cryptocurrency on on-line alternate platforms.
Prosecutors say the alleged scheme labored like this: Purchasers deposited their cash into financial institution accounts run by managing companions. The cash was then transferred to dos Santos or his Venezuelan spouse, Mirelis Yoseline Diaz Zerpa, who would both pocket it, purchase bitcoins and different cryptocurrencies in addition to conventional monetary belongings, or repay different members of the scheme.
Purchasers have been promised a ten% month-to-month return on their investments over 12- to 48-month contracts, however didn’t personal the bitcoins they have been instructed G.A.S. purchased with their cash. And, they have been assured, it was risk-free: They might get their complete preliminary funding again on the finish of the contract.
As Bitcoin fever grew, dos Santos was quick changing into a star in Cabo Frio.
“If he needed to run for mayor, governor even, he’d win,” stated Gilson Silva do Carmo, 52, one among dos Santos’ alleged victims.
The chubby younger man in thick-rimmed glasses was additionally gaining a style for the excessive life, shopping for costly jewellery and a swanky house as contracts poured in from elsewhere in Latin America, the U.S., Europe and the Gulf.
Brazil’s lenient legal guidelines regulating cryptocurrency helped gasoline dos Santos’ rise, consultants say.
On the similar time, Brazil’s securities regulator was making cryptocurrency extra enticing: It licensed the nation’s funding funds to put money into digital currencies in 2018, giving them higher credibility. Final yr, Brazil accredited Bitcoin exchange-traded funds, solely the second nation on the earth to take action.
In and round Cabo Frio, the place residents noticed neighbors reap rewards by investing their life financial savings in G.A.S., many started to worry lacking out.
Do Carmo was amongst them.
After his therapist instructed him he bought his home to put money into G.A.S. and had been receiving 10% month-to-month returns for a yr, do Carmo invested simply over half his retirement fund.
In Cabo Frio, dos Santos’ success impressed others: Some opponents promised even increased returns — 20% or extra a month.
Dos Santos wasn’t completely happy.
In mid-April, he mentioned with associates how rivals have been encroaching on his turf, in accordance with WhatsApp messages intercepted by federal police.
4 months later Wesley Pessano, a cryptocurrency dealer, was shot useless in his Porsche. Police accuse dos Santos of ordering the hit.
Rio state police additionally linked two tried killings to dos Santos. On March 20, a dealer was shot whereas driving his BMW by means of Cabo Frio. Three months later one other agency’s operator was focused, his automotive hit by 40 bullets. Each survived.
Issues got here to a head on April 28 when Rio police seized the 7 million reais on the helipad of the Insolito Boutique Resort outdoors Cabo Frio. A monthslong investigation into dos Santos’ enterprise adopted.
On Aug. 25, federal police raided greater than a dozen places linked to G.A.S., together with dos Santos’ residence the place he was discovered with 13.8 million reais ($2.5 million) and arrested. Brokers additionally discovered laborious drives containing 10 occasions that quantity in Bitcoin, gold bars, jewellery and a number of other sports activities vehicles.
Sixteen associates have been additionally charged, together with Diaz Zerpa, dos Santos’ spouse, who left the nation weeks earlier than the raid and is believed to be in Florida, in accordance with authorities. They are saying she withdrew greater than 4,300 bitcoins value $185 million (1 billion reais).
Do Carmo watched in horror; he had invested the remainder of his financial savings within the firm simply weeks earlier.
“I believed, ‘My God, what have I carried out?’” he stated. “You watch the whole lot you fought for, your complete life wash away from one second to the following.”
Brazilian regulation enforcement continues to be attempting to uncover the true measurement of dos Santos’ empire.
Prosecutors have recognized a minimum of 27,000 victims in a minimum of 13 Brazilian states and 7 different international locations, together with the U.S., United Arab Emirates, the U.Okay. and Portugal.
Nonetheless, the true tally is probably going a lot increased, stated Luciano Regis, a lawyer representing dozens of victims.
“It’s laborious to have a dialog with anybody in Cabo Frio who doesn’t know somebody who invested,” he stated.
