Spanish courts are awash with claims from investors tricked into crypto Ponzis, reports local outlet 20minutos.
The lawsuits were lodged on behalf of thousands of investors who’ve lost hundreds of millions to alleged crypto Ponzis and pyramid schemes in recent years.
According to 20minutos:
- 3,000 investors lost €280 million ($344 million) to London-based Algorithms Group.
- 4,000 investors forfeited €136 million ($166 million) to Nimbus, believed to be incorporated as a shell in Malta.
- Up to 32,000 investors are thought to have sunk up to €100 million ($123 million) to Spain’s Arbistar 2.0.
Crypto Ponzis and pyramid schemes convince would-be digital asset investors to contribute to a fund with larger-than-life returns.
However, the money is usually never really invested — the scheme pays returns from the pockets of newly-recruited marks.
Crypto Ponzis are just like any other
Algorithms Group is accused of operating a pyramid scheme. The crew promised to pay 25% returns, with dividends dished out weekly.
Last month, The Olive Press reported 300 victims had lodged a class-action lawsuit against Algorithms Group, in what would be Spain’s first ever crypto fraud case to reach the country’s national court.
Early investors may have enjoyed the promised returns when Algorithms Group launched in 2019.
But by November 2020, founder and ringleader Javier Biosca reportedly couldn’t keep up with his growing client base — dividends dried up.
Tenerife-based crypto Ponzi Arbistar 2.0 was a similar case.
Arbistar 2.0 said it capitalized on arbitrage opportunities between different cryptocurrencies.
Spanish courts found Arbistar paying interest to existing investors with newly raised money — not with trading profits.
Arbistar director Santiago Fuentes Jover was acquitted in 2017 for his involvement in a fraud conducted by Germán Cardona Soler, dubbed Spain’s answer to Bernie Madoff.
Starting in 2007, Soler ran pyramid scheme Forex Finance, which reportedly left 180,000 investors €350 million ($428 million) out of pocket.
In a statement to a local TV channel, Jover said they blamed a computer error for losing access to “around 10,000 Bitcoins” belonging to investors.
Jover was arrested last October.