Nearly 3,800 people affected in the Arbistar case, considered the largest cryptocurrency scam in history, submitted a request to the National Court of Spain.
In the letter they urged that they be imposed sentences of up to 29 years and 9 months in prison the alleged leader of the scheme, Santiago Fuentes Jover, and the other five defendants, with sentences ranging from 16 to 27 years old of deprivation of liberty.
According to the indictment, the Aránguez law firm estimates the “global loss defrauded” at €3,500,543,857.52. The list of those affected amounts to more than 8,000 victims. Among them, there are hundreds of Argentines.
The presentation demands that all defendants jointly and severally compensate those injured in Bitcoin (BTC), specifying that civil liability will be based on the return of the amounts transferred to Arbistar, more a 45% additional for “pecuniary and moral damages”
Arbistar scam: how it operated
The Arbistar case and its visible head, Santiago Fuentes, could represent the largest pyramid scheme registered to date in the field of cryptocurrency investment.
“Those involved offered investors weekly returns of between 8% and 15% thanks to a supposed computer system. They were paid every Saturday, but in reality the scheme operated like a pyramid. The promised profitability only materialized if the user left their money on the platform for two months,” he explains to iProUP Camilo Suárez Venegas, President of Asoblockchain.
Santiago Fuentes, the head of the organization
Part of the funds obtained from investors was used to pay the high interests agreed to previous investors, thus generating a feeling of confidence in the security and profitability of the investment.
“As happens in these ponzi-type schemes, this incentivized investors to increase your bets in the hope of greater profits“, he comments to iProUP Franco Pilnik, cybercrime prosecutor and scam specialist.
The law firm that is filing the request for penalties points out the alleged commission of continued crimes of aggravated fraud, organization and direction of a criminal organization. The covers of active participation in a criminal organization and falsification of commercial documents are also added.
The prosecution requests that, in addition to Fuentes Jover, the court sentence Diego Felipe Fernández to 27 years and 6 months in prison; Álex Castro to 27 years and 6 months; Iván Grima at 27 years and 6 months; Lester Zarabozo at 19 years and 9 months; and Laura Concetta at 16 years and 9 months.
Arbistar scam: the penalties
The brief presented by the victims of Arbistar maintains that the accused, “acting in common agreement and guided by their desire for illicit benefit, concocted a plan” between May 2019 and September 2020.
“Pretending to act in cryptocurrency arbitrage, they actually created a classic pyramid scheme, in which the capital obtained from new investors supported the pyramid, supposedly generating compounding (interest),” the presentation notes.
“No trading was ever carried out ‘at any time’ arbitration with Bitcoin. This unexecuted mechanism would have involved selling users’ virtual currency at high prices and repurchasing it when the price fell,” Pilnik adds to graph the maneuver.
The scam would represent almost US$4,000 million
The firm, the presentation continues, “presented itself on its website as a company specialized in trading, market analysis and software development to operate in the cryptocurrency market, offering very high returns, between 8% and 15%“.
“Users entered different amounts of fiat currency (euros) from their bank accounts to the COINBASE cryptocurrency trading platform, which managed the exchange of euros to BTC, and then transferred the resulting amount of cryptocurrency to the Community Bot, the supposed algorithm responsible of the Arbistar cryptocurrency arbitration,” the indictment explains.
José Carranza, former Director of the Economic Crimes division of the Córdoba police. details to iProUP the circuit implemented by Arbistar, which later had its replicas in Argentina: “Once the cryptocurrencies were sent to Arbistar’s electronic wallet, the client lost control over their capital and could not withdraw the amount in the following two months. “.
This Arbistar digital wallet was created to receive cryptocurrencies, which are then transferred to an external bank account.
“In August 2020, several investors requested to withdraw their funds, but Arbistar refused to return the capital. However, it was on September 13, 2020, when the company announced the closure of the Community Bot,” adds Carranza.
The specialist comments on the reasons for the dismissal: “They reported about a alleged failure in the computer program that automated the buying and selling of BTC, generating more interest than was actually obtained, which caused a imbalance in accounts and frozen funds of the users”.
According to experts, Arbistar simulated returns to prevent people from withdrawing their capital
The number of those affected amounts to 3,820 users, to which are added more than 3,500 injured parties who are being represented by another 12 private accusations.
Arbistar scam: the great deception
For Pilnik, Arbistar simulated profits: “It showed a false profit on the platform, creating the appearance of high profitability and leading the client not to withdraw the capital contributed to reinvest it and obtain more profits.”
“Investors believed that their capital was allocated to financial markets to carry out arbitrage operations with the deposited funds, observing alleged performance percentages offered by the platform for these arbitration operations with the users’ capital,” the complaint details.
The writing states that “the amount of Bitcoin each user had on the platform was constantly increasing due to the supposed benefits of the Community Bot, but all figures shown were fictitious.”
Something seems to leave no room for doubt: if at some point those figures had been real and would have been related to a real trading operation, no errors would have occurred such as those alleged by the company to close the Community Bot operation.
The writing concludes that “if it was decided to reinvest the money earned from the initial investment, the figures multiplied exponentially due to compound interestgenerating million-dollar profits in short periods of time and using this as an excuse so that no one would withdraw either the capital or the profits, which allowed the company to continue for years.
This last aspect explains in some way the permanence over time of a type of scheme that usually lasts much less. It remains to be seen whether the responsibility of the accused is proven and, of course, they serve an effective sentence for damage that is difficult to calculate in its full magnitude.
