The Federal Police of Brazil apprehended an individual last week suspected of orchestrating a colossal money laundering operation. According to reports from the Brazilian edition of CNN, the operation is believed to have funneled $2.6 billion in illicit proceeds through crypto assets.
The suspect was arrested on January 7 at Guarulhos Airport in São Paulo while attempting to board a flight to Dubai in the UAE. The individual had been residing in Dubai, a location chosen for its lack of extradition treaties with most Western countries.
Cryptocurrency and Shell Companies: Tools of the Trade
As per the report, the arrested individual received illicit funds in Brazil, proceeds from drug trafficking and other crimes, and converted them into cryptocurrencies. These illegal proceeds were then channeled through the accounts of various shell companies to obscure their origin.
One such shell company managed $285 million of the illicit proceeds in just ten months. None of these proceeds were reported to the tax authorities. The Federal Police of Brazil stated, “There is also evidence that even living abroad, he continued to commit crimes, having identified a bank account belonging to a company owned by an intermediary and used by him to receive and transfer funds.”
Operation Colossus: A Widespread Investigation
The arrest was part of a broader investigation launched in 2022 against tax evasion, money laundering, and other criminal associations linked to cryptocurrency trading between 2017 and 2021. Operation Colossus spanned several Brazilian cities and states, including Sao Paulo, Rio de Janeiro, and Minas Gerais.
Despite the mainstream financial industry’s adoption of crypto, with the recent approval of Bitcoin ETFs in the US, digital currencies remain a preferred tool for criminals due to their decentralized nature. Over the years, law enforcement agencies worldwide have arrested and cracked down on several large-scale illegal operations using crypto.
Last year, the two founders of the crypto mixing platform Tornado Cash faced criminal charges in the United States for assisting criminals, including hackers linked to the North Korea-linked Lazarus Group, in laundering over $1 billion in illicit funds.
