The Civil Guard of Spain reported the arrest of a citizen known by the pseudonym CryptoSpain. He is suspected of creating and managing a large-scale international financial pyramid that operated under the guise of the investment platform Madeira Invest Club.
This is reported by Finway
Fraud Scheme and Scale of Losses
As a result of the scammers’ activities, at least 3,000 individuals were affected, and the total financial losses exceeded 260 million euros. According to the investigation, the organization operated on the classic principle of a financial pyramid: the profits of early participants were funded by the contributions of new investors, with no real economic activity taking place.
Under the guise of an investment club that launched in early 2023, Madeira Invest Club offered clients the opportunity to invest in various assets: cryptocurrencies, precious metals, real estate, exclusive alcohol, luxury items, and premium cars. Clients were promised fixed returns and guaranteed buybacks of assets, with contracts structured as purchases of digital art objects with a commitment to repurchase at a set price.
“Contracts were structured as purchases of digital art objects, which the club committed to repurchase at a predetermined price. However, according to the investigation, there was no real economic activity — the profits of early investors were paid from the funds of new investors.”
International Organization and Complex Structure
The suspect, as established by law enforcement, created an extensive network of companies and bank accounts in over ten countries, including Spain, Portugal, the United Kingdom, Albania, the United States, Malaysia, Belgium, Thailand, Hong Kong, and the Dominican Republic. This structure allowed for the masking of real money flows and complicated the tracking of funds received from investors.
According to law enforcement, Madeira Invest Club positioned itself as a private investment club; however, its actual activities were aimed at attracting new investors and redistributing their funds among older participants in the scheme.