Cryptocurrency seized in Cyprus as fraud network unravels

By Vasilis Andrianopoulos

A well-established international cryptocurrency fraud, dismantled recently, resulted in numerous victims and significant profits for a criminal network. Operating in Cyprus, the organization convinced investors of a new cryptocurrency issuance, similar to past cases in the country. About a year and a half ago, authorities dismantled a similar network that earned tens of millions of euros.

"They claimed they had developed software and an algorithm."
According to Europol, from December 2017 to February 2018, the perpetrators pretended to establish a genuine online trading company, purportedly issuing a new cryptocurrency. During the initial coin offering (ICO), they solicited at least 10 million "tokens" or cryptocurrencies in exchange for money.

Investors paid using established cryptocurrencies like Bitcoin and Ethereum. The Austrian perpetrators asserted credibility by claiming to have developed a unique algorithm alongside their software for selling the "tokens." Unfortunately, this turned out to be false.

Typically, an ICO relies on transparency, communicating the responsibilities of each team member to prospective investors. However, in this case, Europol noted a lack of transparency regarding team members and the cryptocurrency algorithm.

In February 2018, after receiving cash offers from investors, the perpetrators abruptly shut down all project social media accounts and the fake company's website. The exact number of investors losing money remains unknown pending ongoing investigations.

Cryptocurrency seizures in Cyprus
A joint police operation involving Austria, Cyprus, and the Czech Republic, supported by Europol, aimed to identify creators of a new cryptocurrency released in December 2017. Six Austrians allegedly responsible for the scam were arrested, and police seized over 500,000 euros in cryptocurrencies, 250,000 euros in cash, froze dozens of bank accounts, and confiscated two cars and a luxury property valued at 1,400,000 euros.

Europol experts coordinated with the Austrian Office of Eurojust, providing a comprehensive analysis of the investigation. Cyprus played a significant role, with Europol deploying a specialist and a mobile office to support operational activities and information exchange.

Eurojust facilitated real-time communication between involved judicial authorities, aiding the execution of European Arrest Warrants and search warrants. Austrian police advised on cryptocurrency seizure and supported suspect interrogation in Cyprus.

Laundering illegal profits
Cyprus has previously been linked to online fraud cases involving cryptocurrencies. In early 2023, a cryptocurrency fraud network operating in Bulgaria, Cyprus, and Serbia was dismantled. Perpetrators used call centers to defraud victims, extorting tens of millions of euros.

Victims primarily came from Germany, Switzerland, Austria, Australia, and Canada. After a two-year investigation, 14 people were arrested in Serbia and one in Germany, with $1 million in cryptocurrencies, 50,000 euros in cash, 150 computers, three cars, and two luxury apartments seized.

Cyprus served as the base for laundering illegal profits, with call centers in Serbia allegedly involved in the fraud being shut down during Serbian authorities' investigations.

[This article was translated from its Greek original]