Law enforcement agencies in Austria, Cyprus, and Czechia have joined forces to dismantle an online cryptocurrency scam, leading to the arrest of six Austrians believed to be behind the fraudulent scheme.
The collaborative investigation, with support from Europol and Eurojust, focused on the individuals responsible for a new cryptocurrency launched in December 2017. Following six house searches, authorities seized over EUR 500,000 in cryptocurrencies and EUR 250,000 in fiat currency, as well as freezing numerous bank accounts. In addition, assets such as two cars and a luxury property valued at EUR 1.4 million were confiscated.
The scam unfolded over a two-month period between December 2017 and February 2018. The perpetrators posed as a legitimate online trading company offering a new cryptocurrency through an initial coin offering (ICO). Investors were lured in to purchase tokens using established cryptocurrencies like Bitcoin or Ethereum. The fraudsters claimed to have proprietary software and a unique algorithm for token sales to enhance credibility.
However, suspicions were raised due to the lack of transparency surrounding the team members and the cryptocurrency’s algorithm. According to a blog post by Europol, traditional ICOs prioritize transparency and clear communication about team members, which was lacking in this case.
In February 2018, the scammers abruptly shut down the project’s social media accounts and website, executing what is known as an exit scam. This left investors realizing they had been deceived, though not all victims have been identified.
Europol played a crucial role in the investigation, organizing operational meetings and providing in-depth analysis. Eurojust facilitated real-time communication among judicial authorities and aided in the swift execution of warrants. Austrian authorities, including the Criminal Intelligence Service and Specialized Prosecution Office, were actively involved in the operations.
The crackdown on this cryptocurrency scam highlights the importance of regulatory oversight and due diligence in the rapidly evolving digital asset space. Investors are advised to exercise caution and thoroughly research any investment opportunities in the cryptocurrency market to avoid falling victim to fraudulent schemes.