Europol busted an international criminal network operating a cryptocurrency pyramid scheme across Bulgaria, Cyprus, Serbia and Germany.
On November 13, the European Union Agency for Law Enforcement Cooperation (Europol) announced that it had successfully cracked down on a criminal network engaged in online scams through call centers. The network was spread all around Europe.
According to Europol, the operation was carried out on January 11, 2023, following an investigation that began in June 2022 at the request of the German authorities. In conjunction with the national authorities of the other countries, Europol conducted raids in 22 different locations between Bulgaria, Cyprus, and Serbia. This resulted in the arrest of 15 individuals, 14 of whom were in Serbia and one in Germany.
Europol Seizes $1 Million In Cryptocurrencies In Physical Wallets.
In addition to the arrests, authorities also seized 3 physical wallets containing approximately $1 million in cryptocurrencies and about €50,000 in cash. They also seized 3 vehicles, electronic equipment, backups with important information, and other documents. The investigation is still ongoing as it is believed that the criminal network has more call centers than were raided.
According to Europol, the criminal network conducted a cryptocurrency pyramid scheme through which they lured victims by offering “apparently exceptional” cryptocurrency investments with the promise of large and guaranteed profits. The network was able to capture hundreds of millions of euros with the operations of just 4 call centers. Many victims, however, chose not to report to law enforcement agencies, making it difficult to quantify the damages.
The modus operandi of the fraudsters was to initially request small sums of money, typically in the three-digit range, to gain the trust of their victims. Once a more intimate relationship was established, they convinced the victims to make transfers of higher amounts each time until the fraudsters had enough to cease communications. According to Europol, the criminal network stole at least $2 million from unsuspecting individuals in Germany.
The Use of Cryptocurrencies in Criminal Activities
As reported by Europol, the agency is working hand in hand with several international authorities to “stay ahead of those who abuse crypto-assets to commit crimes and launder money.”
However, Europol noted that although cryptocurrencies have become attractive to criminals due to their privacy and decentralization features, their use in criminal activities represents a tiny fraction when compared to criminal activities that involved fiat money:
The use of cryptocurrencies for illicit activities seems to comprise only a small part of the overall cryptocurrency economy, and it appears to be comparatively smaller than the amount of illicit funds involved in traditional finance
Governments worldwide are starting to pay more attention to how cryptocurrencies are used in criminal activities. One example of this is the United States government, which has taken action against certain cryptocurrency platforms that have been found to facilitate criminal activity. The most obvious case is the cryptocurrency mixer “Tornado Cash,” which was sanctioned by the US government due to its use by criminals to obfuscate their transactions, but other centralized exchanges have also had to deal with the authorities for similar reasons.