The detainees told police they worked for GAS Consulting & Technology, a cryptocurrency investment firm founded by a former waiter-turned-multi-millionaire, one of Brazil’s biggest pyramid schemes.
Police say the company, owned by 38-year-old Gladson Acacio dos Santos, had transactions totaling at least $7 billion ($38 billion) between 2015 and 2021. Bitcoin-based Ponzi scheme that promised 10% monthly returns to the investors.
In hundreds of pages of documents obtained by the Associated Press, federal and state police and prosecutors accused dos Santos of running a sophisticated racket that defrauded thousands of small-scale investors who believed they were rich from a rapid appreciation of bitcoin. were happening. He is now in a Rio prison awaiting trial on charges including racketeering, financial crimes and ordering murder and attempted murder of two business rivals. He is under investigation for the attempted murder of the third contestant.
Dos Santos has repeatedly claimed his innocence. His lawyers did not respond to the AP’s requests for comment.
Despite the allegations, dos Santos represents an unlikely hero for supporters. Many see him as a modest black man whose unconventional bitcoin business has made him wealthy by gaming a financial system they believe is rigged by the wealthy white elite.
The case also underscores the rapidly growing appetite for cryptocurrencies in Brazil, where years of economic and political crises have made digital currencies an attractive shield against depreciating Brazilian real and double-digit inflation.
Bitcoin enthusiasm was high in Cabo Frio, the resort town where GAS was based. As GAS revenues increased, copycat firms were seeking to capitalize on the rise in early adopters to prosper. A wave of cryptocurrency-related violence followed.
As with several alleged pyramid schemes, Cabo Frio became known as the “New Egypt” and as the city’s top dog, dos Santos was dubbed the “Bitcoin Pharaoh”.
Police say dos Santos started trading in bitcoin in 2014 after leaving his job as a waiter. Officials say he enlisted clients from the Universal Church of the Kingdom of God, where he once trained as an evangelist, promising referral fees to those bringing in new recruits.
In a statement, the Universal Church accused dos Santos of “harassing and recruiting” the clergy and their flock to join their company.
By 2017, dos Santos was making serious money – and getting the attention of authorities. His company’s transactions that year totaled 10 million reais ($1.8 million), 15 times more than the previous year. The country’s financial intelligence unit also noticed that the company – registered as a restaurant – was regularly trading cryptocurrency on online exchange platforms.
Prosecutors say the alleged scheme worked like this: Customers deposited their money into bank accounts run by management partners. The money was then transferred to dos Santos or his Venezuelan wife, Miralese Yoselin Diaz Zerpa, who would either pocket it, buy traditional financial assets such as bitcoin and other cryptocurrencies, or pay other members of the scheme. do.
Clients who were promised a 10% monthly return on their investment in 12- to 48-month contracts, but who did not own the bitcoin, were told that GAS had bought it with their own money. And, he was assured, it was risk-free: he would get his entire initial investment back at the end of the contract.
Dos Santos was fast becoming a celebrity in Cabo Frio as the bitcoin fever rose.
“If he also wanted to run for mayor, governor, he would have won,” said 52-year-old Gilson Silva do Carmo, one of dos Santos’ alleged victims.
The chubby young man in thick-rimmed glasses was also gaining a taste for the high life, buying expensive jewelry and a plush apartment, as contracted from Latin America, the Americas, Europe and elsewhere in the Gulf.
Experts say Brazil’s liberal laws regulating cryptocurrency helped dos Santos’ rise.
At the same time, Brazil’s securities regulator was making cryptocurrencies more attractive: it authorized the country’s investment funds to invest in digital currencies in 2018, giving them more credibility. Last year, Brazil approved a bitcoin exchange-traded fund, only the second country in the world to do so.
In and around Cabo Frio, where residents watched as neighbors reaped rewards by investing their life savings in GAS, many feared missing out.
Do Carmo was one of them.
Carmo invests more than half of his retirement funds after his doctor tells him he has sold his house to invest in GAS and is getting 10% monthly returns for one year.
In Cabo Frio, the success of Dos Santos inspired others: some competitors promised even higher returns – 20% or more a month.
Dos Santos was not happy.
In mid-April, he discussed with colleagues how rivals were encroaching on his turf, according to WhatsApp messages intercepted by the federal police.
Four months later, cryptocurrency trader Wesley Pesano was shot and killed in a Porsche. Police have accused dos Santos of ordering the hit.
Rio State Police also linked the two murders to dos Santos. On March 20, a businessman was shot while driving his BMW en route to Cabo Frio. Three months later the operator of another firm was targeted, his car was hit by 40 bullets. Both survived.
Things worsened on 28 April when Rio police confiscated 7 million reais at the helipad of the Insolito boutique hotel outside Cabo Frio. After a month’s investigation of the business of Dos Santos.
On August 25, federal police raided more than a dozen locations linked to GAS, including the home of dos Santos, where he was found and arrested with 13.8 million reais ($2.5 million). Agents also found hard drives worth 10 times that amount in bitcoin, gold bars, jewelry and several sports cars.
Sixteen associates were also indicted, according to officials, including Diaz Zerpa, the wife of dos Santos, who left the country weeks before the raid and is believed to be in Florida. They say he withdrew more than 4,300 bitcoins worth $185 million (1 billion reais).
Did Carmo watch with horror; He had invested the rest of his savings in the company a few weeks back.
“I thought, ‘My God, what have I done? They said. “You see everything you fought for, your whole life washed away from moment to moment.”
Brazilian law enforcement is still trying to uncover the true size of the empire of dos Santos.
Prosecutors have identified at least 27,000 victims in at least 13 Brazilian states and seven other countries, including the US, the United Arab Emirates, the UK and Portugal.
However, Luciano Regis, a lawyer representing dozens of victims, said the actual number is likely to be much higher.
“It’s hard to negotiate with someone in Cabo Frio who doesn’t know someone who has invested,” he said.
This story has been published without modification in text from a wire agency feed.
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