Brazilian Authorities Uncover $9.7 Billion Crypto Laundering Scheme in Major Multi-City Operation

Brazilian Authorities Uncover $9.7 Billion Crypto Laundering Scheme in Major Multi-City Operation

Brazilian authorities have dismantled a massive $9.7 billion cryptocurrency-based money laundering scheme, arresting suspects in a coordinated operation spanning multiple cities, including São Paulo, Fortaleza, and Brasília.

Dubbed “Operation Niflheim,” the Federal Revenue Service and Federal Police executed 23 search warrants and eight arrest warrants, focusing on a sophisticated criminal network suspected of laundering funds from illegal activities, such as drug trafficking and smuggling. According to a September 20 blog post by blockchain forensic firm TRM Labs, the network primarily used cryptocurrency to conceal illicit gains.

The investigation centers on two companies in Caxias do Sul, which reportedly handled R$ 19 billion (approximately $3.6 billion) and R$ 15 billion (around $2.8 billion) between August 2019 and May 2023.

The operation uncovered a four-layered scheme involving tax evaders, shell companies, and businesses facilitating foreign exchange and cryptocurrency transactions. Laundered funds were then funneled abroad to destinations including the U.S., Hong Kong, and the UAE.

Authorities revealed that more than half of the deposits linked to the main suspects came from individuals with criminal backgrounds, highlighting the widespread use of cryptocurrencies to facilitate illicit activities.

A federal court has frozen approximately $1.58 billion in assets held in both bank accounts and cryptocurrency exchanges, though the platforms involved were not specified. The Federal Police confirmed that over $9.7 billion had been laundered since the investigation’s inception in 2021, underscoring the growing role of cryptocurrencies in financial crimes in Brazil.