🇧🇷BCR #79: Braiscompany offices raided, founders on the run as crypto pyramid collapses
Also: Digital Real pilot "starts now" proclaims Central Bank President Campos Neto
Huge welcome to 🇧🇷Brazil Crypto Report for the weeks of February 13-17, 2023! I hope everyone is doing well.
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Federal Police raid Braiscompany; founders on the run
The suspected R$1.5 billion crypto pyramid scheme was targeted by Federal Police on February 16, with founders Antonio Neto Eis and Fabricia Campos the targets of arrest warrants but were not located by authorities. (BBC Brasil)
Their whereabouts remain unknown: a post from Neto Eis’s Instagram feed suggests he is in Argentina.
Searches and seizures were carried out by law enforcement at Braiscompany’s headquarters in João Pessoa and Campina Grande, both in Paraíba, and in Vila Olimpia in São Paulo, Portal do Bitcoin reports.
A court froze R$45 million worth of Braiscompany assets - cars and cash held in bank accounts - at the request of the Public Ministry of Paraíba. However, the court did not authorize seizure of the assets, nor did it freeze transactions made with several overseas cryptocurrency exchanges. Court documents show that the company had 26 luxury cars in its name.
Portal do Bitcoin’s Fernando Martines revealed that both Antonio Neto Eis and Fabricia Campos are partners in a CVM-approved investment fund called Ever Asset Management that has R$4 million in assets under management.
The Portal also revealed that Neto Eis hastily sold his São Paulo mansion in the Morumbi neighborhood for R$12.5 million in December even though the estimated price of the property was R$15 million.
Binance reportedly froze the accounts of several Braiscompany leaders
Portal do Bitcoin has a great explainer article if you want to catch up on the case.
Digital Real pilot “starts now”, proclaims Central Bank’s Campos Neto
Speaking at the annual BTG Pactual CEO Conference event, the Central Bank president pronounced that the CBDC pilot is now live, though he didn’t provide specific details or timelines.
Campos Neto did reinforce previously stated concepts that the Digital Real will be a wholesale CBDC that will primarily be used by banks and companies. The general population will interact with it via tokenized bank deposits that are converted into stablecoins. He stated:
“The digital currency [enters] to advance the process of tokenization, that is, of digitization, of stopping seeing a bank as just a system of accounts and starting to see it a little more as a system of tokens.”
He also proclaimed that the Digital Real will make the country a world leader in the area of digital finance by bringing more efficiency, security and reach to the country’s financial system.
“We see pilots, for example, where tokenization improves the back office part, improves the asset securitization part, greatly improves the risk part…In one experiment, you can see atomized risk of up to 600,000 transactions per second, there are several experiments that improve efficiency as a whole.”
Campos Neto also discussed the Digital Real during an interview on the program Roda Vida on TV Cultura, stating:
“[I]n the digital world we had three large blocks, I would like to connect the blocks, which is the PIX, with Open Finance, with the digital currency. We already have the digital currency pilot, which will start running soon. I think these three things can change the history of financial intermediation in Brazil, transforming our system into something efficient and today in the world there is no one so advanced.”
Lula Administration is preparing crypto asset decree
Two months after the passage of the national crypto law, the executive branch is close to issuing the decree that will initiate Brazil’s crypto regulatory framework, Valor reports. The text is being prepared by the Ministry of Finance and has the support of both the Central Bank and the CVM, Brazil’s securities regulator.
The Central Bank is expected to be appointed as the formal regulator of the industry (exchanges, wallets, lending) despite a quarrel between Lula and Roberto Campos Neto over the body’s autonomy.
The CVM will likely have a role specific to regulated tokenized securities issued by both centralized and decentralized entities. The CVM will also have authority over exchanges that engage in activities such as ICOs, initial exchange offerings, “Launchpad” type products and derivatives trading.
While the decree will not have an immediate practical effect, it is a foundational step towards implementing the framework laid out in the law.
Crypto on display at Carnaval
Bitcoin is being touted as a means of payment at Praia Bitcoin Beach in Jericoacoara, with a network of establishments accepting sats as payment. Inspired by El Salvador’s El Zonte Bitcoin Beach, a conference happening February 18-21 in Jerí claims to have set the world record for most bitcoin payments made in-person in a given period.
Web3 enthusiasts in Rio de Janeiro hosted a metaverse themed “Bloco Chain” on February 16, drawing in a number of sponsors including ReservaX, Ribus, Blockchain Rio, Ethereum Brasil, Upland and more. Proceeds went toward Educar+, a non-profit that brings Web3 education to underserved populations
Both Decentraland and Upland are hosting metaverse Carnaval experiences
As always, I appreciate you reading and I hope you have a great week.
🗞Brazil Crypto News Rundown
Foxbit launched its Foxbit Earn platform which allows users to earn yields on 15 different cryptocurrencies, such as SOL, ADA, XTZ, MATIC and more. Yields range from 4% to as much as 50% annually depending on the currency. The timing of the announcement is interesting as it comes amid the crackdown on staking services by the US SEC. Foxbit co-CEO João Canhada said in a statement:
“This product aims to bring ease between the traditional and Defi, allowing customers to obtain returns in a friendly and facilitated environment, where even without technical understanding they will be able to surf the results of these protocols. And we will have more news throughout this year, we remain solid, focused and working for an even more robust Brazilian ecosystem.” (Valor) (InfoMoney)
Foxbit also announced the launch of a new asset token backed by loans from Eletrobras, the largest energy company in Latin America. The token carries estimated returns of 52%. (CoinTelegraph Brasil)
Nu Holdings, the holding company that controls Nubank, reported a record US$58 million in profit during for the fourth quarter of 2022 versus a loss of US$66 million during the same period 2021. The neobank also reported US$1.45 billion in total revenue and US$113.8 million in net income. The firm added 4.2 million customers in the quarter to finish the year with 74.6 million. (Reuters)
Xtage, XP’s crypto platform, has enabled external deposits - meaning that customers can now deposit bitcoin and ether into their account from other wallets. According to an internal survey, 88% of clients wanted this ability to deposit crypto direct from other platforms. However, the platform does not permit external withdrawals, but that functionality may be enabled later this year. (Portal do Bitcoin) (InfoMoney) (Livecoins)
João Marco Braga da Cunha, an economist and portfolio manager at Hashdex - Brazil’s largest crypto asset manager, argued in an interview with InfoMoney that the bottom is in and that 2023 will be a year of redemption for crypto markets
Vórtx QR Tokenizadora received the green light from the CVM to issue tokenized real estate receivable certificates and agribusiness receivables certificates as part of the agency’s regulatory sandbox program.
Tether volumes in Brazil increased 58% in 2022 from the previous year, while bitcoin and ether volumes decreased more than 60% during the period - per tax reporting data from the Receita Federal. Fabrício Tota of Mercado Bitcoin suggests that the heightened volumes are reflective of increased remittances rather than dollarizing savings. He told Portal do Bitcoin:
“For some years now, we have been able to see in the volumes reported to the Receita a very large volume, a very significant one, of USDT that is not on local exchanges. Which leads us to believe that this volume is on the main OTC desks and that they meet a different type of demand. Not from exposure, but potentially from international shipments.” (The Block)
Crypto exchange Bitso temporarily suspended withdrawals of the BUSD stablecoin in light of regulatory pressures. The exchange said in a note:
“At the moment we are not taking any kind of decision regarding our institutional relationship with Paxos, we are just temporarily disabling BUSD deposits and withdrawals, taking into account the recent measures taken by Paxos.” (InfoMoney)
For now, other Brazil exchanges continue to offer cryptocurrencies issued by Paxos, such as the Paxos dollar stablecoin (USDP) and Pax Gold. (InfoMoney)
Brazilian businessman and founder of Ser Educacional Jangui Diniz stated on a Flow Podcast interview that he regrets investing in cryptocurrency, specifically investing in the Rental Coins pyramid run by the “Sheik of Bitcoins” Francisley Valdevino. (Livecoins)
DUX, the blockchain gaming community that emerged in 2022, is expanding beyond NFTs and games to help brands and users onboard into Web3. Luiz Octávio Gonçalves Neto, founder and CEO, told Valor:
“We have a client that is one of the largest blockchains in the world and that had a client acquisition cost of US$ 80. We managed to lower it to US$ 10 by remunerating the user with a small amount and encouraging him to study about the crypto world.”
Solange Gueiros and Tatiana Revoredo were named by CoinTelegraph Brasil as the top Brazil crypto women leaders for 2022.
USP professor and noted bitcoin hater Jorge Stofli again took to Twitter to mock bitcoin enthusiasts:
“There are two types of Bitcoin investors: the sucker, and the crook who hopes to take money from suckers. The only difference is whether the guy already realized that investing in Bitcoin is a Ponzi or not.”
Crypto platforms are among the most accessed digital services in Brazil, according to a new study by Comscore. (Livecoins)
An investment fund related to Bitcoin critic Tiago Reis’s Suno Research is being investigated for supposed market manipulation. Suno responded to the allegation saying it was a retaliation. (Portal do Bitcoin)
Me Poupe! has a a new co-owner. Netspaces, a company owned by crypto and internet entrepreneur Andreas Blazoudakis, acquired an equity stake in the financial education company founded by YouTuber Nathalia Arcuri.
Blazoudakis, who had previous stints at iFood and Movile and has helped in the formation of 18 startups, joins the firm as co-CEO. A note sent out to media explained that the main product of Me Poupe! would become a mobile application, stating:
“The app will be an aggregator of the financial market, using open finance technology and artificial intelligence and web 3.0 resources combined with the methodology developed by Nathalia.”
More than 2,500 new ATMs in Brazil now offer crypto withdrawals in BRL via a partnership between Monnos and Saque e Pague. (CriptoFacil)
🎮 NFTs, Gaming and Metaverse
Electrolux is creating a metaverse immersion experience in 11 of its stores across São Paulo and Curitiba. (CoinTelegraph Brasil)
Brazilian comedian Danilo Gentili is partnering with MetaEXP to launch a post-apocalyptic metaverse game call Brazuera Role Play. (CoinTelegraph Brasil)
🏛 Public Policy, Regulation and Enforcement
BlueBenx, the crypto exchange suspected of being a pyramid scheme that suspended clients withdrawals last summer, admitted that it did not have funds to compensate customers. It had been given a six month period to make customers whole. In an email to clients, the company stated:
“On this journey, we identified that it was impossible, despite all the effort and dedication to maintaining the company and its products, to continue offering BlueBenx Finance. In other words, the leverage product that you, the customer, knew, became unfeasible and will no longer be offered.” (Portal do Bitcoin)
The Justice of Rio de Janeiro declared the bankruptcy of GAS Consultoria, a pyramid controlled by “Pharaoh of Bitcoins” Glaidson Acácio dos Santos. According to court documents, GAS has 127,000 creditors, liabilities of R$9 billion and that it moved R$40 billion (US$7.7 billion) in the last decade. (InfoMoney) (Money Times)
A new Central Bank resolution (No. 293) that defines rules for Pix outsourcing and partnerships could impact crypto exchanges and other services that use Pix as a fiat onramp. (CoinTelegraph Brasil) (CoinTimes)
Nilson Alves da Silva, aka “Nilsinho”, the owner of BTC Trader which was a competitor to GAS Consultoria in Cabo Frio, is being investigated by the Rio de Janeiro Public Ministry. Nilsinho was the target of an assassination attempt in 2021, allegedly ordered by Glaidson. (Livecoins)
Real-backed stablecoins are not at risk of being the target of an enforcement action by the CVM, argued several experts interviewed by CoinTelegraph Brasil.
The fight between Lula and the Banco Central do Brasil over the institution’s autonomy shouldn’t have much overall impact on the crypto market, argues this CoinTelegraph Brasil piece.
A Brazilian court ordered Binance to reimburse a client who claims his account was hacked and funds stolen, to the tune of 0.89 bitcoin and R$5,000 in damages. Binance had asserted that the client himself made the withdrawals. (Portal do Bitcoin)
The Receita Federal and the Policia Federal launched Operation Trap Coin against an alleged crypto pyramid that moved at least 996 bitcoins across five states. (BlockNews)
Federal Police launched a new operation against Unick Forex, an alleged cryptocurrency pyramid scheme, in Rio Grande do Sul. (Livecoins)
The Receita Federal announced an auction of seized goods that includes bitcoin mining equipment. (CoinTelegraph Brasil)
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