Brazil police bust $9.7b crypto laundering scheme

Brazilian authorities have uncovered a $9.7 billion cryptocurrency laundering scheme, arresting suspects in multiple cities as part of a major financial crimes investigation.

Brazilian authorities have launched an operation against a multibillion-dollar money laundering scheme involving cryptocurrencies in several cities, including São Paulo, Fortaleza and Brasília.

Blockchain forensics firm TRM Labs announced in a September 20 blog post that the Federal Internal Revenue Service and Federal Police have issued 23 search warrants and eight arrest warrants as part of an operation dubbed “Operation Niflheim,” targeting a network suspected of using cryptocurrency to launder money from criminal activities such as drug trafficking and smuggling.

The investigation focuses on two companies in Caxias do Sul that allegedly transferred R$19 billion (approximately $3.6 billion) and R$15 billion ($2.8 billion) respectively between August 2019 and May 2019.

Brazilian crypto money laundering scheme | Source: TRM Labs

The scheme involved four layers, including tax evaders, shell companies, and firms facilitating foreign exchange and crypto transactions. The laundered funds were then transferred to countries such as the US, Hong Kong, and the UAE.

“Authorities discovered that more than half of the deposits linked to the main suspects came from individuals with criminal backgrounds, indicating the widespread use of cryptocurrencies to facilitate illicit activities.”

TRM Laboratories

A federal court froze $1.58 billion in funds held in bank accounts and cryptocurrency exchanges, but the report did not specify which platforms were involved. The Federal Police reported that more than $9.7 billion in total had been laundered since the investigation began in 2021, underscoring the significant role cryptocurrencies play in facilitating financial crimes in Brazil.