Spanish police have arrested 20 people in connection with a Ponzi scam based on a digital currency, ‘unete’.
Police estimate that as many as 50,000 investors lost up to €50 million in the global operation. Roughly 6,000 of the victims were based locally in Spain. The losses rival the largest among digital currency Ponzi schemes.
Euros were deposited with the operation in exchange for ‘unetes’, each of which was said to represent one dollar.
Investors were promised returns as high as 375% per year, or 7.2% per week prorated. They were offered real-money rewards for recruiting other investors into the scheme. Victims were reportedly impressed by lavish events and charming sales pitches.
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Police said they seized sums of around $22 million, €50 million, C$2,600, £1,600 and A$365 from bank accounts connected with the scheme. Also confiscated were computers, equipment, documents related to fraud and money laundering, €15,505 cash and two luxury cars.
The scam bears some resemblance with that of MyCoin in Hong Kong, where dozens of investors lost millions from false promises of high returns from bitcoin.
Funds in the enete scheme reportedly flowed through an operation set up in St. Vincent and the Grenadines, a regulatory haven.
The investigation took place over a year and a half, and began after a former employee approached police.