Europol has dismantled an international criminal network operating a cryptocurrency pyramid scheme in 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 that engaged in online fraud through call centers across 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 German authorities. Europol, together with national authorities from other countries, carried out raids at 22 different locations between Bulgaria, Cyprus and Serbia. This resulted in the arrest of 15 people, 14 in Serbia and one in Germany.
Europol seizes $1 million worth of cryptocurrencies in physical wallets
In addition to the arrests, authorities also seized three physical wallets containing approximately $1 million in cryptocurrency and approximately €50,000 in cash. They also seized three cars, electronic equipment, backups of important information and other documents. Investigations are ongoing as the criminal network is believed to have operated more call centers than were raided.
According to Europol, the criminal network operated a cryptocurrency pyramid scheme in which they lured victims by offering "clearly unusual" cryptocurrency investments with the promise of large, guaranteed profits. The network generates hundreds of millions of euros in revenue from the operation of just 4 call centers. However, many victims choose not to report to law enforcement, making it difficult to quantify the damage.
The scammer's modus operandi is to first ask for a small amount of money, usually in the three-digit range, to gain the victim's trust. Once a closer relationship is established, they convince the victim to transfer higher amounts each time until the fraudster has enough money to stop communicating. According to Europol, the criminal network stole at least $2 million from unsuspecting individuals in Germany.
Use of Cryptocurrencies in Criminal Activities
As Europol reported, the agency is working hand in hand with several international authorities to “stay ahead of those who misuse crypto assets for crime and money laundering.”
However, Europol noted that while cryptocurrencies are attractive to criminals due to their privacy and decentralized properties, their use in criminal activities accounts for only a small proportion compared to those involving fiat currencies. :
The use of cryptocurrencies for illegal activities appears to account for only a small portion of the overall crypto economy and appears to be smaller than the amount of illicit funds involved in traditional finance.
Governments around the world are starting to pay more attention to how cryptocurrencies are being used for criminal activities. An example of this is the US government, which has taken action against certain cryptocurrency platforms that were found to facilitate criminal activity. The most obvious case is the cryptocurrency mixer “Tornado Cash,” which was sanctioned by the U.S. government for being used by bad actors to obfuscate transactions, but other centralized exchanges have had to deal with authorities for similar reasons.