Author: Nicola Sharp 7 February 2020
Nicola Sharp of business crime solicitors Rahman Ravelli outlines the case – and is unsurprised by the use of cryptoassets in fraud.
Investigators from France, Belgium and Israel teamed up to arrest those behind an international network that defrauded at least €6 million from French and Belgian citizens.
Those running the scheme offered their services on online platforms and promised impressive returns to people through investments in Bitcoin, diamonds and gold. But the scheme appears to have been a Ponzi scheme allegedly controlled by a French-Israeli citizen.
Nine suspects have been arrested as a result of an investigation started two years ago and co-ordinated by the European Union agencies Europol and Eurojust.
Those behind the scheme were predicting returns of between 5% and 35% to investors. They then pretended to manage users’ wallets and invited them to invest more money; with some of the investors actually being paid some interest in an effort to convince them of the scheme’s success.
A large private French company and a French local authority are among those reported to have been defrauded by the scheme. The authorities believe that those who operated it were able to gain a minimum of €6 million, with outstanding invoices existing for several million more. But investigators have so far only been able to recover more than €1 million. The majority of the fraudulently-obtained money is believed to have been taken out of the European Union.
Before the news broke of this fraudulent scheme, authorities in France had identified an increase attempted cryptocurrency-related fraud. While Ponzi schemes relating to investments in gold, diamonds and other commodities have been operating for years it was probably inevitable that cryptocurrency would become the desired asset for those operating such frauds. Crypto is just the latest asset that is being used to lure - and then defraud investors - with the promise of high returns.
Nicola is known for her fraud, civil recovery and business crime expertise, her experience of leading the largest financial disputes and multinational investigations and her skills in devising preventative measures and conducting internal investigations for corporates.