Defendants are charged with a criminal organisation offence for which the maximum penalty is eight years.
Judge Fabio Calheiros do Nascimento, of the 2nd Criminal Court of the Barueri District Court, ordered on Tuesday (13) the pre-trial detention of the founders of ArbCrypto. The crypto arbitration company, which had the player Cafu as a „poster boy“, raised money from investors with false promises of profit, but has not released any loot since August last year.
The courts have complied with the request for arrest made by the Sao Paulo Public Prosecutor’s Office. Warrants were issued on behalf of Alexandre Cesário Kwok, Eneias de Lima Tomaz, Luiz Carlos Rosa da Silva and João Paulo Alves da Silva. They are accused of a crime of criminal organisation, whose maximum sentence is eight years.
„The elements amassed so far indicate that the accused have been part of an organisation of considerable sophistication, whose structuring has required financial resources and mastery of technology. The economic repercussion of the illicit activity is impacting, judging by the volume of resources it has raised,“ said the judge.
The Barueri police told Livecoins last year that the company had raised an estimated 2,500 Bitcoin Fortune (about R$177 million in today’s price). ArbCrypto promised profits of 2.5 percent on top of investments.
Judge cited history of the defendants with financial pyramid blows
In the warrants, the magistrate said that the case „is really about the practice of the financial pyramid, since those interested were not really offered a product, nor a service, just an abstraction, and all they had to do to obtain the high profit promised was to contribute resources and attract new people interested in making such contributions, a characteristic mechanism of the pyramid.
The judge cited that the arrest of the accused is necessary because they have a history of creating fraudulent schemes similar to ArbCrypto, especially the defendants Alexandre Cesário Kwok and Eneias de Lima Tomaz.
Kwow and Tomaz are the founders of the Prosperity Plus and Proswallet pyramids. Prosperity, a scheme that „collapsed“ at the end of 2017, promised revenues of 2.5% per day. The scheme, as Livecoins published in August, had Genbit president Nivaldo Gonzaga as its member.
Founder of Arbcrypto would launch another coup
In the justification for the arrest, the judge also mentioned that the prosecutor found that Kwok was „developing a new platform based on mechanisms similar to the employees“ at ArbCrypto.
„In view of this scenario, I conclude that the arrest is so necessary for
I am protecting public and economic order, as to ensure the future application of criminal law and, at least for the moment, also to try to secure some compensation for the victims; if those who are accused simply disappear they will not be compensated“.
Defending the accused
In the case file, the defence of João Paulo Alves da Silva filed an application for provisional release. Silva is from Rikinvest, a company hired by ArbCrypto to provide services for the purchase and sale of digital assets.
In the case, his lawyers argued that „the defendant had no involvement in the conduct of the company’s business“ but only rendered services. The prosecutor was against. The judge, who has already examined the application, did not accept the justification either.
According to the magistrate, several victims cited Silva’s participation in the scheme. He even delivered vehicles „as a reward for performance in attracting new investors“, as stated in the case file.
The Livecoins report contacted the defence of Kwok and Tomaz. As soon as any comments are submitted, this matter will be updated. Luiz Carlos Rosa da Silva’s defense was not located.