Brazil’s Cabo Frio is dubbed as the ‘New Egypt’ for its various Pyramid schemes operating in the town along with its ringleader Glaidson Acácio dos Santos who is referred to as the Bitcoin Pharoah. Dos Santos as per police sources began trading in Bitcoin after leaving his job as a waiter in 2014. A part-time evangelical preacher in training, he recruited clients from Churches earning a referral fee for bringing in fresh recruits.
By 2017, the accused was earning a lot of money which attracted the authorities’ attention. In the same year, his firm which goes by the name of GAS consulting and technology’s total transactions amounted to 10 million reais [$1.8 million], 15 times more than the previous year. The country’s financial intelligence unit also noticed the firm which was registered as a restaurant regularly traded cryptocurrency on online exchange platforms.
Things finally came to an end when in April 2021, Brazil’s federal police caught red-handed two men and a woman loading a chopper with $1.3 million in neatly packed bills. Police sources said that the fraud firm owned by 38-year-old dos Santos had total transactions worth nearly $7 billion from 2015 through mid-2021 as part of a Bitcoin-based Ponzi scheme that promised investors 10% monthly returns.
As for Santos, he is currently lodged in a Rio jail awaiting trial on charges that includes racketeering, financial crimes, and ordering the killings and attempted murder of two business competitors.
Brazil’s crypto obsession turned fatal
The case reflects the growing appetite for cryptocurrencies in Brazil, where years of economic and political upheaval have made digital currencies an attractive cover against the depreciation of the Brazilian Real and double-digit inflation.
The craze for digital assets especially peaked in Cabo Frio, the seaside town of 230,000 where the office of the kingpin was located. As G.A.S. revenues surged, many copycat firms sprang up, hoping to reap the benefits. Soon a wave of cryptocurrency-related violence followed leading to several murders.
Experts feel that Brazil’s lenient laws regulating cryptocurrency helped fuel the rise of dos Santos. Additionally, Brazil’s securities regulator was making digital currencies more attractive. In fact, in 2018 it authorized the country’s investment funds to invest in cryptocurrencies, giving further credibility.