Regulators crack down on Bitcoin Banco past fraudulent practices in Brazil
Regulators crack down on Bitcoin Banco in Brazil
Brazilian consumer protection authorities are once again taking action against Bitcoin Banco, a defunct cryptocurrency exchange linked to Cláudio Oliveira, the self-proclaimed "Bitcoin King."
The São Paulo Consumer Protection Foundation (Procon-SP) has fined the company for imposing illegal restrictions on customer withdrawals, a practice deemed an abusive commercial violation under Brazilian law, according to Livecoins.
Bitcoin Banco, which ceased operations in 2019, was part of the larger Bitcoin Banco Group, a firm that promised high returns through so-called “infinite arbitration.”
However, the company collapsed amid allegations of fraud and financial mismanagement, later filing for judicial recovery before ultimately going bankrupt in 2021.
Authorities demand accountability despite company’s collapse
The penalty stems from a 2020 consumer complaint regarding blocked withdrawals. Procon-SP’s investigation found that Bitcoin Banco had failed to provide adequate justifications for restricting access to customer funds and did not respond to official notifications requesting proof of legal compliance.
Under Brazil’s Consumer Defense Code, businesses are prohibited from imposing unjustified restrictions on transactions. The regulator also cited the company’s lack of transparency regarding payments, including a specific case where a customer was unable to retrieve R$ 28,531.22 (approximately $5,700 USD).
Despite the company’s bankruptcy, Procon-SP has given Bitcoin Banco 15 business days to present a defense or risk further sanctions. The fine can be reduced if the company opts for an upfront payment. However, if noncompliance continues, authorities warn that harsher penalties may follow.
Bitcoin Banco and its founder remain under legal scrutiny, as Brazilian regulators continue cracking down on fraudulent practices in the cryptocurrency sector.
Meanwhile, Brazil has solidified its status as a global leader in crypto, with 26 million citizens—12% of the population—owning digital assets. This ranks the country sixth worldwide in crypto adoption, highlighting its growing impact in the sector.
