Saturday, February 1, 2020

Police arrest 10 in $6.6M Israeli crypto scam

 



European authorities have arrested 10 suspects accused of defrauding over $6 million from tens of investors. The suspects conducted a crypto pyramid scheme targeting investors in several European countries, including France, Belgium and the U.K. The arrests are the culmination of an extensive investigation that began in 2018.

The investigation was led by Europol and Eurojust, EU agencies that focus on law enforcement and criminal justice cooperation respectively. In a press release, Eurojust indicated that the scheme had defrauded 85 investors, mainly from France and Belgium, although it was based in Israel.

The scheme targeted its victims by phone, promising them incredible returns of up to 35% for a small investment. In a classic pyramid scheme technique, the fraudsters paid off the initial investors using money raised from late-stage investors. The initial payments led many of the investors to stake more money and recommend the scheme to others.

However, after some time, the payments stopped, as they always do. The criminals began to channel all payments into bank accounts belonging to several fake companies in Asian countries and Turkey.

Investigations into the crime ring started in 2018, with Eurojust issuing investigation orders to authorities in the U.K., Bulgaria, Spain, Hungary, Portugal and the Czech Republic to assist with the investigations. In January last year, the authorities made the first arrests, bringing in four suspects arrested in France. Europol also partnered with authorities in Luxembourg to seize $1.1 million.

This is the latest case of crypto fraudsters being brought to book. In January alone, tens of crypto fraudsters have faced the law in connection to millions of dollars lost through crypto scams. The DoJ, for instance, recently charged two alleged fraudsters for using fake identities to raise over $30 million in an ICO. The two were behind CG Blockchain, a company that claimed to develop blockchain auditing tools.

The SEC, on the other hand, charged ICOBox with the issuing of an unregistered ICO in which it raised $14 million. Just days prior, it had charged a San Diego, California man for defrauding $3.5 million from investors in a cloud mining scam.

The law enforcement actions are a positive sign for the crypto industry as it indicates the authorities are cracking down on the rampant crypto scams. Once the industry sheds the scammers, it will appeal to more people and likely attract government support.

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