🇧🇷BCR #60: Binance Plots Brazil Offices, Debit Card Product
🇧🇷BCR #60: Binance Plots Brazil Offices, Debit Card Product
Plus: Six exchanges raided in Federal Police operation; Bit2Me shutters its Brazil expansion plans; Fluminense fan token launches this week
Bom dia pessoal!
Welcome to 🇧🇷Brazil Crypto Report for the week of Sept 19-23.
You may have seen Bloomberg Linea published its Top 500 Most Influential of Latin America list. It’s a pretty long list, but I combed through it and picked out the most relevant crypto names:
Augustin Carstens - former Bank of Mexico governor and current general manager of the Bank of International Settlements. He has become a key figure (some would say antagonist) in the conversation around global crypto regulations and central bank digital currency development
Barbara Gonzalez - assumed the role CEO of Bitso Mexico in June 2022, previously global CFO for the platform, managed the fundraising that allowed the exchange to reach unicorn status in 2021
Daniel Mangabeira - Binance’s senior director for institutional relations in Latam, with previously stints at Uber and Bitso. He is the key figure leading Binance’s on the ground efforts in Brazil and around the region
David Vélez - CEO of Nubank, which recently launched its crypto platform and onboarded one million crypto users in just three weeks.
Fira - a 27 year old crypto and NFT artist from Colombia who has represented the country at several international exhibitions
Gilson Finkelsztain - CEO of the B3 exchange, Brazil’s largest. B3 has been flirting with crypto and digital assets for some time now and is expected to launch bitcoin futures product later this year. B3 is also exploring custody and tokenization solutions
Monica Taher - a public official in the Secretariat of Trade and Investments in El Salvador, she has been leading the formation of a Bitcoin and Blockchain Cluster in the country
Neymar - Neymar became a big catalyst for NFT adoption in Brazil after he purchased two Bored Ape NFTs in January of this year (they have since plummeted in value) and used one of them for his social media profile picture.
Reinaldo Rabelo - CEO of Mercado Bitcoin, Brazil’s first crypto unicorn which was valued at US$2.2bn in the summer of 2021 before crypto winter began. It was reportedly an acquisition target for Coinbase earlier this year but the deal fell apart over valuation concerns
Did I miss anybody? Let me know at aaron@brazilcrypto.report. Also be sure to check out the new “Elsewhere in Latam” section at the end of this newsletter where I highlight the main stories from other parts of the region.
Thanks to everyone for reading and I hope you enjoy this week’s edition!
-AWS
Federal Police Raid Six Crypto Exchanges in Anti-Money Laundering Operation
Federal Police in Brazil executed 101 warrants and raided six crypto exchanges, four banks and three accounting offices in a massive anti-money laundering investigation called Operation Colossus. Police suspect that a group of traders arbitraging cryptocurrencies moved more than R$61bn through the formal banking system over a four year period by purchasing the coins in the US, Hong Kong and Singapore, and then selling them in Brazil.
A freezing of R$1.25bn (US$237m) worth of funds was also ordered by a São Paulo court as part of the operation. Specific names of the entities raided were not disclosed. The police report claimed:
“The investigations showed that part of the documentation presented to the banks has indications of misuse of purpose. The documentation in question was intended to hide the national origin of the values, since, according to information, American exchanges did not accept the purchase of crypto-assets with resources from Brazil.” (CoinTelegraph Brasil) (Portal do Bitcoin)
Binance Rolls Out Office Plans, Hints at Debit Card Product for Brazil Users
Binance is setting up two co-work offices in São Paulo and in Rio de Janeiro for its approximately 150 employees in the country. Employees will be able to choose whether they want to work in-person or remotely. The exchange also intends to set up a formal office space in the next 12-18 months.
The company’s Global Vice President and Regional Director Matthew Shroder explained that Binance is in the process of becoming a payments institution regulated by the Banco Central. He told O Globo:
“Currently, Brazil does not require this type of license, but we are anticipating future requirements based on the regulations that are being approved. We are being proactive to ensure that even before the new regulations go into effect, we meet the prerequisites to operate as a crypto exchange.”
Shroder also explained that a debit card product that allows users to spend crypto in local currency is on the roadmap for Brazil. Binance launched this product in Argentina last month, via a partnership with Mastercard, and it has been well received. While Shroder wouldn’t commit to a specific release date, he explained:
“The first results we are seeing in Argentina are that the product is being very successful. We are evaluating what the next markets will be and there are certainly regulatory requirements to follow and negotiation with partners. But given the size of the Brazilian market and its importance to Binance, Brazil is undoubtedly at the top of the list of upcoming markets for this product. I'm confident we'll have something soon.”
In other Binance news, Daniel Mangabeira - Binance’s Latin America head of Institutional Relations - highlighted the company’s position on regulations in the region while speaking at the MKBR22 event, hosted by B3 and Anbima. Namely, he stated that while regulations need to exist, they should not be too tight:
“If we don't have a legitimation that allows, above all, that innovation continues to exist, that we don't have many ties in this environment”, he said, referring to the challenges for the sector to grow in Brazil."
Mangabeira also spoke to “the issue of legitimation, which involves a lot of regulatory political debate. In Brazil it is something that we are experiencing intensely. I find it very commendable, at least this inclination towards this debate, I find it very positive”.
Should this “legitimation” not occur, he said, it will not be possible to “settle the foundations so that we actually have a crypto-economy future”. (Portal do Bitcoin)
Bit2Me Restructures Brazil Expansion Plans
Crypto winter has claimed another victim. Spanish crypto exchange Bit2Me has scaled back its plans to enter the Brazilian market after commencing operations in April of this year. The exchange laid off around 20 Brazil-basd staff, with the remainder of the local staff now reporting directly to the head office in Spain.
Bit2Me Brazil country manager Ricardo da Ros told Valor:
“Due to negative market conditions, the company decided to restructure its entry into Brazil. Now it has few employees and will work more gradually.”
da Ros, a Brazil crypto veteran who has previously worked with Binance, Crypto.com and Ripio, offered more color in a Linkedin post.
🎙 Be sure to catch the latest episodes of the 🇧🇷Brazil Crypto Report podcast.
1️⃣ This week, I had the chance to interview Credix CTO Maxim Piessen. Credix is building a decentralized credit marketplace and is one of the most exciting DeFi startups operating in Brazil right now. Definitely worth a listen!
2️⃣ I also hosted Renata Rodrigues, who leads global community and education efforts at Paxful - the peer-to-peer bitcoin marketplace that recently eclipsed 10 million users worldwide. We discussed Paxful’s efforts to bring bitcoin education to underbanked communities in Brazil.
3️⃣ Also be sure to check out this episode with Camila Rioja, head of Latam at Celo Foundation. We talked about the growing Celo ecosystem in Brazil and Latin America, dove into the concept of “regenerative finance” and discussed the Celo community’s various grants programs for those interested in getting involved.
🗞Brazil Crypto News Rundown
📈 Markets
Valor ran a piece discussing the regulated crypto fund landscape in Brazil and the opportunities available to professional investors in the region.
Hurst Capital, the alternative investment platform, launched a new token that tracks a basket of blue chip metaverse cryptocurrencies. The token will automatically liquidate positions that reach an all-time high. The basket will be comprised of five cryptos - each with a 20% stake: apecoin (APE), The Sandbox (SAND), Decentraland (MANA), THETA and Axie Infinity (AXS). Murillo Alves, director of digital assets at Hurst Capital, told Valor:
“We decided to do it this way so that the client doesn't have to study entry and exit points. We do the hard work, and it's projects we believe in. A PwC survey says that by 2030 up to 20% of business will be done in the metaverse. We strongly believe in that.”
Huobi Global, one of the world’s largest crypto exchanges by volume, is enabling fiat purchases of crypto in Brazil via Pix through a partnership with AstroPay. The fiat onramp will also be available for customers in Uruguay, Mexico, Chile, Peru and Colombia. (InfoMoney) (Portal do Bitcoin)
QR Capital, owner of QR Asset, announced a new investment round and an expanded membership - adding Brazilian venture capital firm Tessera, Domo Invest and investor Edgar da Silva Ramos to its cap table. QR also announced that its QR Blockchain Assets fund, an actively managed fund that was among the first to offer crypto exposure to accredited investors, is now listed on XP Investimentos. (InfoMoney) (CoinTelegraph Brasil)
Tokenized stock market BEE4, a CVM regulatory sandbox project, began operating on September 22. It is the regulated first market for tokenized shares to operate in Brazil, and it caters to companies earning between R$10m and R$300m that do not have access to the B3 exchange. The exchange is open for trading during select periods during its launch phase. (InfoMoney) (BlockNews)
Legal risks and uncertainties are holding back professional and institutional investors in Brazil from diving into the world of decentralized finance, panelists at the MKBR22 conference - hosted by B3 and Anbima - highlighted. (InfoMoney)
Former Sao Paulo FC player and coach Hernán Crespo is now an investor in a new US$25 million venture fund called Alaya Capital out of Chile that will invest in cryptocurrency companies in Latam. (Portal do Bitcoin)
Bitcoin and crypto inflows into Brazil are continuing to impact the country’s trade balance. (CoinTelegraph Brasil)
Crypto exchange Bitso reported that it tripled its total volume in Brazil between June and August. (Livecoins)
📱Adoption
Central banks in countries such as Norway, Portugal and Trinidad and Tobago are inquiring to learn more about Brazil’s Digital Real design. (BlockNews)
On the payments front, is Brazil headed toward more of a centralized technological structure through models like Open Banking, or more towards a decentralized model through the Digital Real and regulation of cryptocurrencies. Leonardo Cavalcanti of CryptoTimes explores.
Safiri Felix, former head of product and partnerships at Transfero, has joined PicPay is its new head of crypto. (BlockNews)
Paxos, the US-based crypto infrastructure platform that is working with Mercado Livre, Nubank and PicPay, is looking to hire an enterprise partnerships manager based in Brazil. (BlockNews)
$FLU, the Fluminense fan token, will launch on Monday, September 26th on the Socios platform. Tokens will be priced at US$1 each and will be available in three tranches. (BeinCrypto) (CoinTelegraph Brasil)
Brazil’s Ministry of Agriculture, Livestock and Supply is hiring a cryptocurrency and blockchain expert to “to carry out studies on the characteristics of blockchain technologies and their dismemberment into digital currencies, cryptocurrencies and tokens to prospect new business models and applications in agribusiness.” (CriptoFacil) (Portal do Bitcoin)
QR Capital and Criptomaníacos have launched a crypto master class course focusing on bitcoin, NFTs, mining, regulation and more. (Portal do Bitcoin)
Mercado Bitcoin and Gama Academy are promoting a recruitment fair designed to entice novice developers to work on the Ethereum stack. (Portal do Bitcoin)
The Digital Real’s focus is not on payments, but rather on the construction of settlement services, Fabio Araújo - coordinator of the Banco Central’s Digital Real efforts, said last week. He also revealed that there will be a new round of LIFT lab pilot projects next year, with the application process opening in February. (BlockNews)
The Fundação Getúlio Vargas School of Economics is hosting a free online event about cryptocurrencies. (Livecoins)
MIBR, the largest e-Sports organization in the country, is launching its own $MIBR fan token in partnership with Bybit and Socios. The token will grant holders access to exclusive experiences and activations. (BeinCrypto)
Several Brazilian projects are participating in the latest Gitcoin grant, which distributes funds via quadratic funding. The projects include Impacta Finance, Cambiatus, BlackLeadersDAO, AgroForestDAO and Ethercast Brasil. (CoinTelegraph Brasil)
Roughly 20 percent of all cryptocurrency transactions declared to the Receita Federal were made by women. (BeinCrypto)
Bitcoin personality and developer Jimmy Song will be headlining Satsconf, which will take place November 8 in Sao Paulo. (CoinTelegraph Brasil) (Portal do Bitcoin)
Brazilian football legend Romario is one of 10 players represented in a new NFT collectible series from Cripto Sports, an NFT sports platform in Brazil. (CoinTelegraph Brasil)
DaX Green, a British-Brazilian startup, launched a carbon credit platform linked to preserving 107,000 hectares of forest in the Amazon. (CoinTelegraph Brasil)
Biocase, a Brazilian biotech firm, is raising funds via a token sale of its BioTrip token to fund research into medicinal uses for psilocybin , the chemical compound present in hallucinogenic mushrooms. (CoinTelegraph Brasil) (Portal do Bitcoin)
$MENGO, the fan token for the Flamengo football club, more than doubled in a single day and surged 172% over a two day period. The jump could be due to a new collection of jerseys scheduled to be rolled out soon, which token holders would be able to vote on. (Portal do Bitcoin) (CoinTelegraph Brasil)
🎮 NFTs, Gaming and Metaverse
W3Block is creating a “tokenizer” that will allow for expanded applications of NFTs, such as in jewelry or art marketplaces and for digitizing different services, documents and assets. (Valor) (CoinTelegraph Brasil)
Brazilian startups found creative ways to use NFTs to support Arbor Day reforestation projects. (Exame)
Clothing line Reserva is launching another NFT novelty via ReservaX, its innovation and novelty division. The Spriz NFT Series is a sports shoe that integrates the physical and digital worlds in the metaverse. The first release of an NFT shoe sold out in less than 12 hours. (CoinTelegraph Brasil) (Livecoins)
Brazilian digital fashion startup VEX is looking to launch a virtual clothing line native to Web3 and the metaverse. (Crypto Times)
Football NFT platform Rough Diamonds has hired 11 Brazilian athletes to be a part of its initial cohort of personalities with NFTs on the platform. (Crypto Times)
The CVM, Brazil’s securities regulator, is organizing a webinar in the metaverse during World Investor Week, an event promoted by 100 countries and IOSCO. (Portal do Bitcoin)
Brazilian singer Pará Fafá de Belém is launching an NFT series via a new partnership with tokenization firm Liqi. (Crypto Times) (CoinTelegraph Brasil)
🏛 Public Policy, Regulation and Enforcement
A Rio de Janeiro judge has ordered “Pharaoh of Bitcoins” Glaidson Acácio dos Santos to pay some 122,000 creditors to the tune of R$19bn (US$3.6bn) within three days - it is unlikely he’ll be able to come up with the funds. Also, his wife Mirelis Yoseline Zerpa reportedly spent R$100,000 on luxury products in the US and left the bill for Glaidson to pay. Caixa Econômica Federal, the credit card issuer, is now attempting to collect the debt from Glaidson while he is in prison. (Valor) (Portal do Bitcoin) (CriptoFacil) (Valor Investe) (The Block)
Former Flamengo goalkeeper Bruno Fernandes de Souza declared that he lost R$50,000 in the GAS Consultoria pyramid scheme, run by Glaidson Acacio dos Santos. (Livecoins)
16 companies commented to CoinTelegraph Brasil regarding the CVM’s stated intention of playing a more active role in regulating the cryptocurrency market in Brazil. New CVM president João Pedro Nascimento has signaled that his agency will issue guidance on what cryptocurrencies should be considered securities.
Henrique Meirelles, the former Finance Minister and Central Bank president and current Binance advisor, announced his support for Lula in the upcoming presidential election and could become the exchange’s “ambassador” in a new potential Lula government. (Portal do Bitcoin)
COAF, the financial activities control board, said that the suspicious activity reports filed by crypto exchanges in Brazil in August were of “little use for the purposes of [identifying] money laundering”. 80% of of the reports came from just 2-3 exchanges, and the data in the reports was difficult to use and comprehend, she explained. For this reason, COAF opted to close the reporting channel that several crypto exchanges had originally lobbied to open. The remarks came at a Febraban conference. COAF director Ricardo Liáo highlighted the urgent need for regulation:
“It is a very high risk issue for all economies, given what we already know, it really is very risky, let's put it this way, leaving this market even longer without an order, an organization, in order to function legitimately ... there is an obligation on the part of the state to protect, let's say, in some way, these investors.
“With the possibility of passing the bill [to regulate crypto assets], the test is over. We will wait for these institutions to be properly registered with their own regulator so that they can, with higher quality, make communications to Coaf”. (InfoMoney) (Portal do Bitcoin)
A judge has frozen real estate properties of BlueBenx executives Roberto de Jesus Cardassi and William Batista on behalf of defendants who are trying to recuperate funds blocked on the platform. (Portal do Bitcoin)
BlueBenx also created a new version of its BENX token, which it might intend to use as a way of paying back customers who had withdrawals blocked last month. An email to customers stated that the BlueBenx “recovery plan goes through its token” and that there will be “significant increase in the liquidity of the token and, consequently, in the fulfillment of the desired recovery plan”. (Portal do Bitcoin)
A Banco Central official warned that there are unregulated institutions in the country unlawfully offering offering exchange services using cryptocurrencies as backing. Ricardo Franco Moura, head of the BC’s Prudential and Exchange Regulation Department, told a Febraban conference:
“It is not possible to have an unregulated institution offering an exchange service using cryptoassets as backing.” (Valor Investe)
BlueBenx customers who had funds frozen have also become easy targets for scammers preying upon disgruntled users in chat groups and on Facebook. (Portal do Bitcoin)
Representatives from the Economic Ministry met with the CVM last week to discuss topics related cryptocurrency regulation. In the meeting, CVM president João Pedro Nascimento warned that his agency will soon publish guidance for the domestic crypto market. (Livecoins). (CoinTelegraph Brasil)
Banco Safra has been subpoenaed by the US government to provide information about Brazilian customers who used the SFOX crypto platform to evade taxes. (Portal do Bitcoin)
Federal Police are investigating an alleged bitcoin pyramid scheme run by Thiago da Silva Rocha, from the state of Acre, that swindled an estimated R$30m from more than 20 victims. The scheme promised 3% monthly returns on investment. (Portal do Bitcoin)
A new report details how investigators in Brazil are tracking and cracking down on cryptocurrency scammers. (CoinTelegraph Brasil)
A cryptocurrency miner an alleged pyramid scheme operator Carlos José Souza Fuziyama was honored by the Rio de Janeiro city council. Fuziyama was a promoter of the D9 pyramid scheme that resulted in losses of R$200m to investors. (Portal do Bitcoin)
💣Elsewhere in Latam
TravelX, an Algorand-based marketplace for tokenized travel products, launched this week offering inventory from low-cost Argentine airline Flybondi. The platform offers 2.5 million airline tickets which are tokenized upon purchase and turned into NFTs called NFTickets. (CoinDesk) (InfoMoney)
Bitso has introduced a new crypto QR payment tool in Argentina that will allow shoppers to pay with cryptocurrencies at a variety of supermarkets, restaurants and other stores. (The Block)
El Salvador repurchased $565 million worth of bonds set to mature in 2023 and 2025, and it plans to commence a new offering in eight weeks’ time. The move comes as the country seeks to dispel rumors of a potential default on its debt, particularly as it is underwater currently on most of its bitcoin purchases over the last year. President Nayib Bukele claims that the purchases have saved the country US$275m. (CoinDesk)
Bitfarms, the Canadian bitcoin miner, launched a mining farm in Argentina at Rio Cuarto - in the province of Cordoba, where it is taking advantage of the country’s abundant shale gas reserves. The company claims that the facility’s natural gas usage has helped it to save money and boost its hashrate. COO Geoff Murphy commented:
“Based on current foreign currency exchange rates and natural gas prices in Argentina, the cost of the power in Rio Cuarto is expected to be the lowest in Bitfarms portfolio, creating a significant advantage.” (Decrypt)
Really liked the “Elsewhere in Latam” section, Aaron 👀👀👀