Welcome to Latam Insights, a compendium of Latin America’s most relevant crypto and economic news during the last week. In this issue: 0 million cryptocurrency Ponzi scheme founders were arrested in Argentina, the Central Bank of Brazil established cryptocurrency regulation as a priority, and the Argentine Fintech Chamber proposed crypto tax exemptions in Argentina. 0 […]
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Founders of $400 Million Cryptocurrency Ponzi Scheme Arrested in Argentina
Two individuals, a woman and a man, were captured in Argentina on charges of having perpetuated a Ponzi scheme that moved over 0 million in cryptocurrency in Brazil. The operation managed to track the couple’s whereabouts with the help of the Argentine Federal Police and Interpol. Argentina Captures Couple Accused of Orchestrating a 0 Million […]
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Investors in Collapsed Ponzi Scheme Resist Liquidator’s Attempts to Force Repayment at Current BTC Prices
Investors in the bitcoin Ponzi scheme Mirror Trading International are reportedly resisting liquidators’ attempts to have them repay digital assets withdrawn before it collapsed. According to the investors’ lawyer, MTI liquidators are intentionally misinterpreting the Insolvency Act for their benefit. Liquidators Face Accusations of Prolonging the Settlement Process A group of Mirror Trading International (MTI) […]
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California School Officials Plead Guilty to Running Crypto Mining Scheme With School Resources
A sophisticated scheme to defraud Patterson Joint Unified School District has been unveiled, with senior officials Jeffrey Menge and Eric Drabert at the helm, using the district’s resources to mine cryptocurrency illegally, as disclosed by the DOJ.
School Officials Plead Guilty to Crypto Mining Operation Using District Resources
Two senior officials from the Patterson Joint Unified School District in California have admitted to exploiting school resources for their own gain, including orchestrating a cryptocurrency mining operation, the U.S. Department of Justice (DOJ) disclosed. Jeffrey Menge, 43, of Copperopolis, and Eric Drabert, 44, of Modesto, entered guilty pleas to charges of theft concerning programs receiving federal funds, as announced by U.S. Attorney Phillip A. Talbert.
From 2018 through 2022, Menge, serving as the Assistant Superintendent and Chief Business Officer, alongside Drabert, the IT Director hired in 2020, engaged in fraudulent activities to siphon off funds from the school district. Their elaborate scheme involved over .2 million in deceitful dealings through Cencal Tech LLC, a company under Menge’s control. By creating a fictitious executive, “Frank Barnes,” they bypassed restrictions on transactions with the school, engaging in double billing and charging for undelivered items.
The duo’s illicit activities extended beyond financial misconduct. Utilizing high-end graphics cards and other district-owned resources, Menge and Drabert established a crypto mining farm within the district’s facilities, directing the proceeds into personal wallets. The operation, whose scope across the district’s 10 schools remains unclear, significantly increased electricity consumption, a matter of growing concern for U.S. energy regulators amidst a crackdown on energy-intensive crypto mining.
In addition to the mining operation, Menge exploited district vehicles for personal gain, including the sale of a Chevy truck acquired at a bargain and the personal use of a Ford Transit van. The funds embezzled, ranging between million to .5 million for Menge and 0,000 to 0,000 for Drabert, were lavishly spent on home renovations, luxury cars, and other personal expenses.
Do you think there are many other illicit mining operations? Share your thoughts and opinions about this subject in the comments section below.
Criminals Behind $2M School Theft Admit Guilt: Crypto Mining Scheme Uncovered
In recent developments, two California school district officials have admitted guilty to stealing up to .8 million and misappropriating electricity to finance and operate a clandestine crypto-mining operation.
The United States Department of Justice (DOJ) disclosed that Jeffrey Menge, former Assistant Superintendent and Chief Business Officer of Patterson Joint Unified School District, and Eric Drabert, the district’s IT Director, pleaded guilty to charges of theft concerning programs receiving federal funds.
Fraudulent Billing Scandal
According to the DOJ’s statement, Menge, as Assistant Superintendent, hired Drabert as the school district’s IT director around 2020.
Together, they orchestrated a series of illicit activities to siphon funds from the district. Menge reportedly utilized a Nevada-based company called CenCal Tech LLC, which he controlled, as a front for the crypto scheme.
The investigation revealed that to circumvent restrictions on conducting interested party transactions, Menge created a fictitious executive, “Frank Barnes,” to represent CenCal Tech.
Through this setup, it is alleged that Menge and Drabert executed fraudulent transactions worth over .2 million, involving practices such as double billing, overbilling, and billing for undelivered items.
Illicit Crypto Mining Operation Unveiled
Diversifying their criminal activities, Menge and Drabert went beyond financial embezzlement, according to the US Department of Justice.
The law enforcement agency stated that the individuals utilized “high-end graphics cards,” school district property, and electricity to establish and operate a crypto mining farm within the school district.
The illegally mined crypto assets were then redirected to wallets under their control. Additionally, Menge is alleged to have exploited school district-owned vehicles, acquiring a Chevy truck at a discounted price and selling it for personal profit while using a Ford Transit van as his vehicle.
The overall magnitude of the embezzlement was staggering. Menge misappropriated funds between million and .5 million, while Drabert was found guilty of stealing between 0,000 and 0,000.
The DOJ revealed that the ill-gotten gains were used for “lavish” personal expenses. Menge indulged in remodeling his residence, purchasing luxury vehicles, including a Ferrari sports car, and funding other personal endeavors. Drabert, on the other hand, utilized stolen funds to renovate his vacation cabin and for various personal expenses.
The guilty pleas by Jeffrey Menge and Eric Drabert, former officials of Patterson Joint Unified School District, shed light on a shocking case of embezzlement and crypto mining fraud within the education system.
Featured image from Shutterstock, chart from TradingView.com
Pastor Accused Of Defrauding Congregation With $3 Million Crypto Ponzi Scheme
Denver-based internet pastor, Eli Regalado, is at the center of a controversy surrounding an alleged crypto Ponzi scheme involving INDX coin.
The self-proclaimed spiritual leader has come under scrutiny as Colorado’s securities regulator investigates his deceptive practices, which reportedly resulted in over million in ill-gotten gains. Fortune magazine report shed light on the matter, exposing Regalado’s questionable actions and shedding light on the plight of the victims involved.
Pastor Regalado’s Deceptive Crypto Venture
According to Colorado’s securities regulator, Regalado, and his wife orchestrated a “small-scale swindle”, targeting hundreds of individuals with promises of extraordinary returns on their investments in INDX coin.
Presenting his appeals with biblical undertones, using terms like “sowing” and “tithing,” Regalado convinced his online church followers that purchasing the cryptocurrency would yield a tenfold increase in their investments.
However, the promised returns never materialized, and investors lost their “hard-earned” money. To compound matters, it is alleged that the Regalados diverted a significant portion of the funds to finance personal expenses, including home renovations and luxury purchases, further exacerbating the victims’ financial losses.
Despite the allegations and mounting legal troubles, Regalado chose to address the accusations head-on by posting a 10-minute video on the crypto project’s website.
In the video, he attempts to deflect responsibility, claiming that misappropriating funds was not solely his decision, but rather a result of divine guidance for a home remodeling project.
Displaying a lack of understanding of financial concepts, Regalado haphazardly employs buzzwords like “leverage” and “liquidity” without demonstrating a clear comprehension of their meaning.
Furthermore, Regalado boasts about the supposed success of the project, mentioning “0 million of coins sown before the exchange went live.” However, the Colorado regulator clarifies that these coins have no value, primarily because they could only be traded on the Kingdom Wealth Exchange, an ill-functioning service operated by the Regalados themselves.
Colorado Authorities Take Action To Recover Funds
According to Fortune, the next steps in this ongoing investigation are expected to involve the state of Colorado seizing any remaining funds and returning them to the defrauded investors.
Meanwhile, Regalado’s video attempts to invoke divine intervention, predicting that the INDX coin debacle will resolve itself miraculously through divine intervention in the financial sector.
According to CoinGecko data, the total crypto market cap has declined over 4.6%, reaching as low as .51 trillion on Monday. However, when compared to one year ago, the cryptocurrency market has witnessed an impressive surge of 55.27%.
At the forefront of the cryptocurrency market stands Bitcoin (BTC), the pioneering digital currency that continues to dominate the landscape. As of today, Bitcoin’s market cap stands at an impressive 5 billion, accounting for a substantial 47.66% of the total cryptocurrency market.
Featured image from Shutterstock, chart from TradingView.com
Report: CEO of Collapsed Crypto Investment Scheme Hyperverse May Not Exist
A probe into the affairs of the collapsed crypto fund Hyperverse has determined that its highly educated CEO may not exist. The investigation also found that before its collapse, Hyperverse and its CEO both enjoyed celebrity support.
The CEO’s Records Do Not Exist
An investigation into the circumstances that led to the collapse of the crypto venture fund Hyperverse has determined that Steven Reece Lewis, the company’s supposed CEO, may not exist. According to the findings of the probe, neither the University of Leeds nor the University of Cambridge have any record of Lewis as a graduate of their respective institutions.
The investigation, which was carried out by The Guardian Australia, also revealed that Lewis’ name cannot be found on either the U.K. companies’ register or with the U.S. Securities and Exchange Commission. Similarly, the tech firm Adobe and the financial services giant Goldman Sachs have no record of the collapsed crypto fund’s CEO.
Businessman Sam Lee and his business partner, Ryan Xu, are suspected to be the brains behind Hyperverse, but both have reportedly denied claims linking them to the collapsed firm.
Celebrity Endorsement
Besides using fake qualifications and a non-existent CEO, promoters of Hyperverse also used celebrity endorsements to give the scheme a semblance of legitimacy. Some of the celebrities who have appeared in videos endorsing both Lewis and the crypto fund are Steve Wozniak, Chuck Norris, Jim Norton, and Lance Bass.
However, in its report, the Australian publication acknowledged that the celebrities may not have been aware that Hyperverse was using videos in which they feature to promote a pyramid scheme. According to the publication, Hyperverse lured victims by promising guaranteed minimum returns of 0.5% per day to investors who bought “memberships.” The celebrity support was seemingly key to the collapsed crypto fund’s plans, the publication concluded.
Meanwhile, the publication’s findings came just a few weeks after a report suggested that investors may have lost millions of dollars to scammers behind Hyperverse. According to the blockchain intelligence firm Chainalysis, investor losses are estimated to be around .3 billion.
What are your thoughts on this story? Let us know what you think in the comments section below.
FBI Busts Indian Citizen Group For $15 Million Crypto-To-Cash Money Laundering Scheme
In a recent crypto investigation, the US FBI successfully infiltrated a group of Indian citizens suspected of engaging in illicit activities involving the exchange of cryptocurrency for over million in cash.
The alleged transactions took place at various locations in Westchester County, with the group catering to customers seeking anonymity for their activities.
Crypto Crime Unveiled
According to recent reports, five out of the six suspects were apprehended on October 17 and subsequently charged in US District Court, White Plains.
The charges primarily revolve around operating an unlicensed money-transmitting business. The investigation unfolded with the assistance of law enforcement agents who monitored 80 “cash hand-offs”.
The FBI’s scrutiny began in April 2021 when they identified a suspect operating within the “dark web” criminal marketplaces.
Although the individual remains unnamed in the criminal complaint, they are believed to be a co-conspirator of the arrested local suspects. Notably, the suspect offered to ship cash to customers in exchange for cryptocurrency.
According to the complaint, the unidentified co-conspirator disclosed to an undercover officer in January that some of their customers were involved in drug sales, while their wealthier clients were hackers.
The co-conspirator claimed to have amassed approximately million over three years by exchanging cash for cryptocurrency.
In February, an individual responsible for mailing packages of cash on behalf of the co-conspirator was arrested. The complaint reveals that this individual had been receiving sacks of cash from various individuals, three times a week for 18 months, at a Westchester County post office. The cash bundles ranged from 0,000 to 0,000.
In a bid to receive leniency during sentencing, the aforementioned individual agreed to assist the FBI with their investigation. Over several months (from February 10 to September 27), they allegedly participated in 80 controlled cash pick-ups amounting to ,067,000.
One of the arrested individuals, Raju “Jay” Patel from Flushing Queens, played a significant role in the operation. The complaint alleges his involvement in 58 cash transfers totaling .8 million.
Raju would collect cash from various locations in George, Massachusetts, North Carolina, Pennsylvania, and South Carolina. Subsequently, Raju allegedly coordinated the transfers with the co-conspirator and the FBI’s confidential source.
On March 6, Raju allegedly arranged an exchange of 0,000 at a Tarrytown supermarket parking lot. Surveillance conducted by law enforcement agents captured Raju leaving his Queens apartment with an orange cloth bag, which he handed over to the FBI’s confidential source upon arrival in Tarrytown. The bag reportedly contained 9,715.
Illicit Cash Exchange
Similar exchanges took place at a parking lot in Port Chester, further implicating the suspects involved. On August 6, Shaileshkumar Goyani allegedly handed over a bag containing 4,000 to the FBI’s confidential source.
Apart from Goyani, the complaint identifies Brijeshkumar “Samir” Patel, Hirenkkumar Patel, Naineshkumar Patel, and Nileshkumar Patel as additional suspects in the case.
All the suspects are charged with operating an unlicensed money-transmitting business under New York and federal laws.
According to an affidavit by FBI agent Lawrence Lonergan, such unlicensed money-transmitting businesses operate as shadow banks, enabling funds to pass through without undergoing the scrutiny imposed by Congress on the United States financial system.
While the allegations against Goyani’s crypto fraud remain unproven, his defense attorney, Daniel A. Hochheiser, emphasizes that his client has not been indicted by a grand jury. Hochheiser further stated that if and when an indictment is issued, Goyani intends to enter a plea of not guilty.
Featured image from Shutterstock, chart from TradingView.com
‘I Won’t Tell if You Don’t’ — SEC Unearths Alleged Scheme by Do Kwon to Fabricate Terra Transactions
In the wake of the U.S. Securities and Exchange Commission’s (SEC) call to depose Terraform Labs creator and former CEO Do Kwon, the SEC unveiled an alleged exchange between him and his former associate Daniel Shin. The ex-Terra boss reportedly claimed he could fabricate transactions on the Terra blockchain to render them authentic and accrue fees, further penning that he could strive to render the doctored transactions “indiscernible.”
‘I Can Just Create Fake Transactions’ — SEC Publishes Leaked Chat Between Kwon and Shin
Court filings submitted by the SEC show a purported conversation between the Terraform Labs founder and former CEO Do Kwon and his business partner the former CEO of Chai, Daniel Shin. “Kwon perpetrated a scheme to fabricate Chai transactions on the Terraform blockchain to make it appear more active, all to dupe investors,” the SEC filing claims.
The U.S. securities regulator added:
For instance, in an extensive private chat between Kwon and Daniel Shin2 during the early stages of Chai and Terraform’s formation and partnership, Kwon details how he intended to use Chai to create fake transactions on the Terra blockchain, which would appear real and generate fees.
The alliance forged between Terra and Chai sparked considerable excitement upon its unveiling on June 11, 2019, with the company elucidating that the pact ushered Terra into South Korea’s TMON, a bustling e-commerce hub retailing a vast array of products from electronics and fashion to home decor and gifts.
The conversation allegedly held between Kwon and Shin, marked May 9, 2019, sees Kwon purportedly saying, “I can just create fake transactions that look real, which will generate fees.”
Within the disclosed dialogue, Shin probes the likelihood of discovery concerning the authenticity of these transactions. Answering the query, Kwon allegedly affirms, “I will try my best to make it indiscernible.”
Subsequent to persuading Shin into endorsing the scheme under a veil of confidentiality — a pact sealed with a playful ‘I won’t tell if you don’t,’ Shin seemingly proposes a smaller-scale trial to “see what happens.”
Recently, following the SEC’s initiative to depose Kwon, his legal representatives outlined the task as “impossible,” spotlighting his detention in Montenegro. The SEC’s legal team contests the stance of Kwon’s counsel, emphasizing the necessity of his interrogation.
“Currently, the SEC is being denied its fundamental right to gather the relevant facts because it has not had an opportunity to depose the most critical witness in this case, who has, through counsel, actively conducted his own discovery from the SEC and third parties,” the SEC document articulates.
The peculiar entanglement between Terra and Chai garnered speculation in the aftermath of the ecosystem’s downfall. Adding fuel to the fire, a whistleblower going by the alias “Fatman” unveiled a thread alleging Kwon morphed Chai into his “personal money laundering machine.”
“All he had to do was create the illusion of retail demand and then publicize the narrative that KRT was being used everywhere,” penned the whistleblower on May 28, 2022.
What do you think about the alleged conversation between Shin and Kwon? Share your thoughts and opinions about this subject in the comments section below.
Tanzanian Central Bank Launches Foreign Exchange Reserves Boosting Gold Buying Scheme
The Bank of Tanzania said on Sept. 25 that it has kickstarted an initiative that seeks to boost the country’s foreign exchange reserves by buying gold with local currency. The bank said its objective is to acquire six tonnes of gold from miners and traders in 2023 alone.
The Tanzanian Gold Reserve
The Tanzanian central bank said on Sept. 25 that it had commenced the so-called domestic gold purchasing program which aims to boost the country’s foreign exchange reserves. According to a report in The Chanzo Initiative, the start of the gold-buying program came nearly six months after the Tanzanian government unveiled the process to launch the gold reserve.
In a video update shared a few days before the Sept. 25 announcement, the Bank of Tanzania (BOT) governor Emmanuel Tutuba said the institution had already bought some 418 kilograms of gold. However, the commodity was subsequently sold and the revenues generated have since been transferred to the country’s forex reserves. The central bank’s objective is to acquire six tonnes of gold in 2023, Tutuba reportedly said.
The Foreign Exchange Shortages
As previously reported by Bitcoin.com News, Tanzania has been grappling with shortages of U.S. dollars. To deal with this, the central bank reminded players in the country’s foreign exchange market of their obligations which include dealing with licenced foreign currency brokers. At the time, the central bank said these steps were intended to “foster macroeconomic stability and safeguard the stability of the financial system.”
— Bank of Tanzania (@BankOfTanzania) September 25, 2023
Meanwhile, in the statement shared via X (formerly Twitter), the Tanzanian central bank said it will use local currency to pay for the gold.
“The Bank of Tanzania wishes to inform the public of the commencement of the domestic gold purchasing program which aims to bolster foreign exchange reserves through acquiring and holding gold. The bank is therefore purchasing gold from domestic miners and traders in Tanzanian shillings,” the read the statement.
The bank added that all stakeholders are invited to partake in the scheme.
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What are your thoughts about this story? Let us know what you think in the comments section below.