In April 2025, the Brazilian cryptocurrency investment platform Braiscompany was exposed as a Ponzi scheme, resulting in a loss of $190 million for about 20,000 investors due to false promises of high returns. The mastermind was sentenced to 128 years in prison.
This incident not only highlights the high risks associated with cryptocurrency investments but also reminds us of the critical importance of protecting our funds in this opportunity-filled market.
Braiscompany Scam: Why Did Investors Fall for It?
Braiscompany, established in 2018, claimed to offer a fixed monthly return of 8% through cryptocurrency trading, attracting a large number of retail investors. However, investigations revealed that the platform never engaged in real investments but instead used the funds from new investors to pay the "returns" to earlier investors, a classic Ponzi scheme. By early 2023, the platform ceased payments, and the financial chain broke, leaving 20,000 victims with total losses.
Currently, a Brazilian court has sentenced three former executives of the now-defunct cryptocurrency company Braiscompany to a total of 171 years in prison, one of the harshest sentences for a cryptocurrency scam in the country's history.
Joel Ferreira de Souza, identified as the mastermind, was sentenced to 128 years in prison. The other two—Gesana Rayane Silva and Victor Veronez—received 27 years and 15 years, respectively, for managing client funds and acting as key intermediaries in the scheme.
The success of the scam was facilitated by the following factors:
●False advertising: Braiscompany used aggressive marketing and forged high-profile partnerships to mislead investors.
●Lack of regulation: The Brazilian cryptocurrency market suffers from weak regulation, and the platform was not subjected to effective KYC/AML scrutiny.
●Money laundering network: Through shell companies and unregulated crypto wallets, the platform concealed the flow of funds.
This case serves as a reminder that while the anonymity and decentralization of crypto investments offer freedom, they also provide a breeding ground for fraud.
How Cryptocurrency Investors Can Identify Ponzi Schemes
To avoid becoming the next victim, investors need to learn to recognize the common characteristics of Ponzi schemes:
1. Unusually high returns: Any project that guarantees fixed high returns (unbelievably high) should be viewed with suspicion. The high volatility of the crypto market makes fixed returns generally unrealistic.
2. Lack of transparency: Platforms that refuse to disclose how funds are used, investment strategies, or team backgrounds. For example, Braiscompany never made its trading records public.
3. High-pressure marketing: Scams often use aggressive advertising, celebrity endorsements, or "limited-time offers" to urge investors to enter quickly.
4. Complex withdrawal restrictions: Braiscompany required funds to be locked in for a year, and difficulty in withdrawing funds is a typical feature of Ponzi schemes.
5. Anonymous team: Extra caution is needed if the project team's identity is unclear or refuses to undergo KYC (Know Your Customer) verification.
Upon noticing these signs, users should be cautious and conduct thorough investigations before investing.
Insights from This Incident on Brazil's Blockchain Regulatory Policies
In recent years, Brazil has been actively improving its regulatory framework for blockchain and cryptocurrencies to protect investors and combat fraud.
About the regulatory bodies
1. Central Bank of Brazil (BCB): Responsible for regulating financial transactions, payment systems, and activities involving cryptocurrencies. The Central Bank of Brazil is currently conducting public consultations on this topic.
2. Brazilian Securities and Exchange Commission (CVM): Primarily responsible for formulating and implementing regulatory policies for securities and other financial assets to ensure market fairness and transparency.
3. Brazilian Association for Cryptoeconomics (ABCripto): This association is committed to establishing best practice guidelines for crypto market operations, serving as an important measure for industry self-regulation. Although membership is not mandatory, it is generally regarded as an important reference for reliable governance practices.
Current relevant legislation
1. Law No. 14.478 (2022): This law establishes a regulatory framework for Virtual Asset Service Providers (VASPs), requiring all VASPs operating in Brazil to obtain a license beforehand and strictly adhere to anti-money laundering and counter-terrorism financing (AML/CTF) regulations.
2. Law No. 12.865 (2013): This law mainly regulates the fintech sector, although it primarily targets traditional financial institutions, some of its provisions also apply to the cryptocurrency sector.
The Braiscompany case is a reflection of the global immaturity in crypto market regulation. The severe sentence handed down by Brazilian authorities (128 years for the mastermind) indicates that the government is intensifying its efforts to combat financial crime. However, law enforcement alone is not enough to eradicate the problem. The blockchain industry needs a coordinated effort between technology and regulation.
