In a decisive move, the Internal Revenue Service and Federal Police of Brazil seized around $1.6 billion worth of crypto and fiat. Both organizations launched an operation called Niflheim to dismantle a large scheme involving money laundering, tax evasion and cryptocurrency fraud. This joint operation targeted multiple cities of Brazil including Caxias do Sul, São Paulo, Fortaleza and Brasília. Let’s dive deeper to learn what exactly happened.
Aim of this Operation
The focus of this operation was to uncover the obscure financial activities of groups involved in cryptocurrency frauds. To crack down on these illegal financial operations, a total of 23 warrants were issued. Investigators found that two companies in Caxias do Sul handled over R$ 34 billion between August 2019 and May 2024. The companies played a key role in money laundering and moving funds outside official banking channels.
The investigation revealed a four-layer system:
Evaders – These individuals and companies converted money into cryptocurrencies. They also underbilled imports and hid revenues to avoid taxes.
Orange Companies – Shell companies were created to receive funds from the evaders.
Filtering Companies – These businesses filtered the transactions to make their origins harder to trace.
Authorized Exchanges – These entities handled the final stage of crypto exchanges, concealing the illegal funds.
Criminal Networks Exposed
Investigators uncovered alarming details. More than half of the deposits in one of the companies came from individuals with criminal records. These records had the data of laundered money, drug trafficking and smuggling. The level of these activities gives an idea of how deep the crypto related crimes have integrated into financial systems of Brazil.
Authorities also identified import traders making deposits. These transactions were likely tied to underbilled imports and tax evasion.
Seizures and International Operations
As part of Operation Niflheim, Brazilian police and tax officials have frozen around $1.6 billion in crypto and fiat held in bank accounts and on crypto exchanges. They believe the total frozen amount could reach 9 billion real.
Officers also revealed that they had shut down three criminal groups involved in this massive scheme. These groups allegedly moved 55 billion real ($9.8 billion) over the past three years using cryptocurrencies. The money primarily came from drug trafficking and people smuggling.
The operation extended beyond Brazil. Police conducted raids not only in several Brazilian states but also in the United States, targeting businesses and individuals. The groups were allegedly sending money to recipients in China, the United Arab Emirates, the United States, and Hong Kong. The suspected leaders of these groups are believed to be from Caxias do Sul and Orlando, Florida.
Crypto Crime in Brazil
Brazil’s IRS monitors cryptocurrency transactions closely. Rio Grande do Sul has become a hotspot for crypto-related activity. Between 2020 and 2024, over 16,575 companies and 75,025 individuals conducted crypto transactions exceeding R$ 10,000. The total value of these transactions was more than R$ 148 billion. One individual handled R$ 735 million, while one legal entity moved R$ 41 billion.
Brazil Tightens Crypto Controls
Brazil is stepping up efforts to combat cryptocurrency crime. Authorities use tools like Normative Instruction 1888/2019 to track and regulate crypto transactions. The government is focusing on stopping illegal financial flows. The message is clear: crypto-related crimes are under serious investigation.
Operation Niflheim shows Brazil’s determination to stop crypto crime. As the crypto market grows, the pressure on illegal activities is only getting stronger.
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