Brazilian Police Raids Offices of Several Local Crypto Exchanges in Investigation Probe

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The Brazilian Federal Police has begun a sweeping investigation into tax evasion and money laundering using cryptocurrencies. Presently, the Brazilian police force has raided the offices of about six cryptocurrency exchanges.

Operation Colossus Heats Up

According to local news sources, the Brazilian police have ramped up Operation Colossus – a sweeping money laundering and tax evasion investigation – along with the country’s foremost tax authority. As part of this operation, they will probe individuals and companies identified to have conducted financial crimes with cryptocurrencies.

After securing multiple arrest warrants from a criminal court in Sao Paulo, the police are now moving ahead with enforcement, ensuring that every party mentioned is probed and properly investigated. The warrants include two arrest warrants as well as 37 search-and-seizure warrants.

The investigations appear to have stemmed from a report conducted by Brazil’s Financial Intelligence Unit, which found that several suspicious activities had been tied to crypto trading in the Latam country. Although the alleged crimes occurred between 2017 and 2021, the top brass at Brazil’s police force believes numerous nefarious activities are still being perpetrated.

The exchanges that have been raided haven’t been disclosed. However, the police have frozen about $238 million in securities and assets being held by those under investigation – including individuals and the trading platforms in question.

New Crypto Unit Earns Its Stripes

The Brazilian Law enforcement unit is no stranger to investigating crypto crimes. In 2021, the Brazilian Police Force carried out over 30 search-and-seizure warrants to reduce money laundering via cryptocurrencies. However, since the country’s crypto space remains highly unregulated, enforcement against money laundering and tax evasion has proven difficult.

To help expedite enforcement, the Brazilian government created a unit dedicated to crypto investigations earlier this year. At the time, the public prosecution of the Federal District, which was located in Brazil’s central-east region, created “Crypto,” a new unit that will focus on helping other prosecutors carry out crypto investigations and educate the public on the proper way to use digital assets.

Speaking to reporters at the time, Frederico Meinberg, a public prosecutor and the coordinator of this new investigative unit, explained that the unit would take only the most highly trained agents, equipping them with a knowledge of the market and the tools required to ensure proper investigations. He pointed out that a major part of agent training will be focused on their interactions with the crypto ecosystem – starting with exchanges and peer-to-peer platforms.

Just as the country’s law enforcement continues to ramp up investigations, Brazil’s financial watchdogs are improving their enforcement of laws. Last week, Singapore-based crypto exchange Bybit announced that it would no longer offer crypto futures and options trading in the country after it was banned by the Securities and Exchanges Commission of Brazil (CVM).

The CVM announced the ban earlier this month and alleged that Bybit had been trying to raise funds from investors in Brazil without getting approval to act as a securities intermediary. Currently, only Brazil’s stock exchange – B3 – is allowed to offer securities trading.

In its statement, Bybt confirmed that it would comply with the ban, adding that its officials were already speaking to the CVM about a potential resolution to allow derivatives trading to return to its Brazilian users. The crypto trading platforms also stated that its other products – including spot market and asset trading – would continue to comply with the country’s securities laws.

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