Austrian-Led Ponzi Scheme: €7.5 Million Losses and Six Arrests in a European-Wide Operation

Overview

• Approximately €7.5 million defrauded from investors
• Six main suspects arrested
• Assets worth over €2.2 million seized

The Scam

Authorities in Austria, Cyprus, and the Czech Republic successfully dismantled an intricate online scam targeting crypto investors. The swindlers promised to sell rights or tokens to a nonexistent new cryptocurrency, luring investors with a false sense of a legitimate online trading company.

Details of the Fraud

• Operated from December 2017 to February 2018
• 10 million tokens or respective rights offered for sale
• tokens offered at acceptable prices in Bitcoin and Ethereum
• Claimed development of their own software and algorithm for the token sale

Exit Scam

In February 2018, the scammers abruptly closed all social media accounts and took down their fake company’s website, leaving investors realizing they had been victims of a con.

International Cooperation

Europe’s law enforcement agencies collaborated in real-time to execute arrest warrants and search warrants:

• Eurojust and Europol provided communication and coordination support
• Europol deployed a mobile office to Cyprus and Austria deployed ground officers
• Five operational meetings held between Europol experts and Austrian desk at Eurojust

Key Participating Agencies

1. Austria: Central Public Prosecutor’s Office for Combating Economic Crimes and Corruption
2. Cyprus: Cyprus Police
3. Czech Republic: National Organised Crime Agency

Conclusion

This case serves as a reminder of the importance of investor education and vigilance against those exploiting the growing popularity of cryptocurrencies. It underscores the significance of international cooperation in combating transnational financial crimes.