Brazilian authorities, in a coordinated effort involving the Internal Revenue Service and Federal Police, have seized approximately $1.6 billion in cryptocurrency and fiat currency. This operation, dubbed "Niflheim," targeted extensive money laundering, tax evasion, and cryptocurrency fraud networks across several Brazilian cities, including Caxias do Sul, São Paulo, Fortaleza, and Brasília.
The primary objective of this operation was to dismantle criminal networks involved in complex financial schemes using cryptocurrency. Authorities issued 23 warrants as part of the crackdown. Investigators identified two companies in Caxias do Sul that played pivotal roles in these illegal operations, moving over R$ 34 billion between August 2019 and May 2024.
Read more: Elon Musk's Non-Compliance to Local Laws Sparks X Ban in Brazil, Over 22 Million Users Affected
Structure of the Criminal Network
The investigation revealed a sophisticated four-layer system:
- Evaders: These entities converted money into cryptocurrencies to underreport imports and conceal income, thereby evading taxes.
- Shell Companies: These were established to receive funds from the evaders, acting as conduits for further financial manipulation.
- Filtering Companies: These businesses obscured the origins of transactions, making it difficult to trace the illicit money.
- Authorized Exchanges: These exchanges handled the final stages of crypto transactions, further masking the illegal funds.
Investigators discovered that over half of the deposits in these companies came from individuals with criminal records, involving money laundering, drug trafficking, and smuggling. Additionally, import traders were implicated in underbilled imports and tax evasion.
Authorities Freeze $1.6 Billion and Dismantle Criminal Networks in International Operation Linked to Drug Trafficking and Human Smuggling
In addition to freezing approximately $1.6 billion, authorities believe the total amount could rise to R$ 9 billion. They also managed to dismantle three criminal groups, which had allegedly moved R$ 55 billion ($9.8 billion) over the past three years. These funds primarily originated from drug trafficking and human smuggling.
The operation had international implications, with raids conducted in the United States and other countries. The criminal groups were found to be sending money to recipients in China, the UAE, the U.S., and Hong Kong. Key figures in these operations are suspected to be based in Caxias do Sul and Orlando, Florida.
Read more: Brazil’s CBDC Pilot Advances: Global Players Join in Smart Contract
The Growing Crypto Crime Landscape in Brazil
Brazil’s IRS closely monitors cryptocurrency transactions, particularly in Rio Grande do Sul, a known hotspot for crypto activity. Between 2020 and 2024, over 16,575 companies and 75,025 individuals engaged in crypto transactions exceeding R$ 10,000, amounting to a total of R$ 148 billion. One individual alone managed R$ 735 million, while a single entity moved R$ 41 billion.
Government Response
Brazil is intensifying its efforts to regulate cryptocurrency, using tools like Normative Instruction 1888/2019 to track and control crypto transactions. The government's message is clear: crypto-related crimes are under rigorous investigation, and the pressure on illegal activities in the market is only set to increase.
Weiliang
Alex
Beincrypto
Others
Bitcoinist
Cointelegraph