DAOE: Cryptocurrency fraud – 12 arrests

The Organized Crime Department of Crete dismantled a transnational multi-member criminal organization, whose members had been systematically active since at least 2019 in fraud under the guise of investing in cryptocurrencies, extorting millions of euros from their victims.

The organization operated through legitimate corporate structures and online platforms, misleading citizens with false assurances of safe and high investment returns, while its activities extended beyond borders through connections and financial flows to foreign countries.

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To put an end to their activities, a coordinated police operation was carried out in the morning hours of March 5, ²⁰²⁶ , in areas of Crete, Attica and Igoumenitsa, during which a total of -12- people, members of the criminal organization, were arrested, while the case file includes another -6- people, two of whom are members of the organization.

A case was filed against them for – as the case may be – criminal organization, aggravated fraud, money laundering, provision of services in cryptocurrencies without certification, concealment of assets for the purpose of declaring bankruptcy and violation of weapons legislation.

The investigation of the case began after appropriate utilization of information and collection of data, which were brought to the attention of the competent prosecution authority and a preliminary examination was ordered.

As emerged from the months-long and thorough investigation, the criminal organization had developed a pyramid scheme (Ponzi scheme), through which the amounts of money paid by new "investors" were used to pay virtual returns to older ones, creating a false image of viability and profitability.

To achieve their goal, the members of the organization exploited the victims' lack of knowledge about cryptocurrencies, presenting digital assets (tokens), which had no real exchange value or utility outside the controlled ecosystem of the companies that issued them, as supposedly reliable investment options.

At the same time, they used virtual electronic wallets, locked balances, and controlled cryptocurrency exchanges to hide the real flow of money.

In terms of its structure, the criminal organization was characterized by a strict hierarchical structure with distinct roles among its members.

Specifically, the leadership core consisted of -4- individuals. These leadership members determined the strategy of action, coordinated the operational executives and organized presentations, webinars and events to promote the fraudulent investment schemes. In fact, to this end, they had also drawn up a -90- day training program, where members were trained in "academies".

Three senior executives were responsible for recruiting victims, participating in events - presentations and speeches, providing illegal investment advice and promoting new "investment packages".

Seven operational members were active in the direct search and attraction of victims through personal and professional networks, while the remaining supporting members provided facilities for finding new investors in order to earn commissions.

In the organization they had created, they also held similar titles, among -21- different ranks, such as “ambassador”, “leader”, “founder's council”, while they earned income/rewards (referral, bonus) from attracting new members to participate. It is also worth mentioning that they proceeded to draft and sign Private Confidentiality Agreements.

In terms of persuasion methods, the members of the organization systematically made false promises of high and guaranteed returns with minimal or zero risk, assuring victims that they could withdraw their funds at any time. They presented themselves as successful investors and group "leaders", showcasing a luxurious lifestyle through social networks, with posts from trips, luxury vehicles and events.

At the same time, they created a sense of “unique opportunity” with artificial time constraints, so that victims would make hasty decisions without due diligence. They also organized online and in-person seminars, provided illegal investment advice without certification, created closed communication groups on messaging applications to cultivate a false sense of credibility and, in cases of platform collapse, promoted new schemes with a different commercial name (rebranding), transferring victims to new alleged investment opportunities.

In the context of the financial investigation carried out, following the issuance of European Investigation Orders in France, Germany and Malta, as well as Mutual Legal Assistance to the United Kingdom, Ireland and Denmark, it was found that the total illegal financial gain of the criminal organization exceeds -14,5- million euros.

In particular, it emerged that the members of the organization were using the financial system methodically to hide the origin of their illegal income, transferring funds to foreign accounts, making expenses through third parties and investing part of the amounts in cryptocurrencies.

In order to give legitimacy to their illegal income, it was established, in collaboration with the National Authority for Combating Money Laundering, that two of the members of the criminal organization are related -on a case-by-case basis- to -4- offshore companies in Bulgaria.

At the same time, typical cases emerged of individuals who, while declaring themselves unemployed, homeless or with zero income, were moving significant amounts of money, as well as a case of an involved party who had been declared bankrupt while concealing assets.

In addition, numerous trips abroad by members were observed to organize and participate in events promoting the fraudulent schemes, demonstrating a luxurious lifestyle to enhance their credibility.

During the time that the preliminary investigation lasted, -73- victims were identified, who had invested sums of money in the fraudulent investment schemes, with the total amount of financial damage they suffered amounting to at least -760.900- euros.

The operation was attended by police officers from the T.A.O.E.K. of Crete, with the assistance – where appropriate – of services from the Directorate for Combating Organized Crime, the local Police Directorates of Rethymno, Heraklion and Thesprotia, specialized officers from the Digital Forensic Investigation and Analysis Sub-Directorate of the Forensic Investigations Directorate, as well as a team from the Capital Market Commission, the competent body for the supervision of businesses operating in cryptocurrencies.

In the on-site investigation, conducted by a specialized team of the Digital Forensic Investigation and Analysis Sub-Directorate of the Forensic Investigations Directorate, in digital evidence (electronic wallets and other data), the circulation of digital currencies exceeding 2.000.000 dollars in today's value was identified. At the same time, significant contracts between members of the organization and corporate schemes for the legalization of their illegal income were identified.

Furthermore, at appropriate stages of the investigation, the contribution of a competent team from the Cybercrime Prosecution Directorate was of crucial importance, conducting digital technical research and analyzing the flow of digital currencies.

From the searches carried out in homes and business premises, the following were found and seized:

• the amount of -37.210- euros,
• the amount of -4.000- Albanian Lek,
• -4- luxury vehicles,
• combat rifle with magazine and -67- combat rifle cartridges,
• -2- pistols,
• -2- hunting weapons,
• -57- cartridges,
• mining machinery,
• numerous digital evidence (usb, hard drives, telephony data, etc.),
• numerous documents confirming the activities of the criminal organization,
• proof of transactions with platforms related to cryptocurrencies,
• handwritten notes and diaries confirming the victims' payments to members of the criminal organization,
• platform credentials and
• documents related to offshore companies.

The National Authority for Combating Money Laundering was informed of its actions regarding the identification of bank accounts in financial institutions in Greece and abroad, as well as digital wallets, securities, financial products, safe deposit boxes and offshore companies, with the aim of prohibiting the movement, transfer or disposal of the relevant funds or assets.

The seized amounts of money will be sent to the Deposits and Loans Fund, while the seized digital evidence and weapons will be sent to the Criminal Investigations Directorate for laboratory tests.

Those arrested are taken to the competent prosecuting authority.

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