Ecuador's Attorney General's Office has ordered a raid on the offices of Fortunario Activos Digitales, which manages bitcoin investments and other cryptocurrencies. About $ 7 million deposited in the accounts of shareholders and company representatives were frozen by order of a judge.
Limits on raising money
The prosecutor reported on Twitter that, together with the national police, they carried out five roundups in Quito, the capital of Ecuador, for allegedly illegal collection of money, a crime defined in articles 323 and 364 of the integral organic criminal code of the South American country. This refers to the massive receipt or collection of money without providing a good or service in consideration.
The law places limits on the collection of money, so that it can only be done on a large scale by entities authorized by the state. According to Ecuador's comprehensive penal code, illegal collection of money can result in up to five years in prison for those who engage in this activity.
According to the preliminary investigation, the Fortunario company allegedly defrauded bitcoin users by operating under a network of alleged companies offering investment services on financial platforms, offering an interest rate of 17% per annum, as reported by local media.
In its publication, the Prosecutor's Office does not clarify the number of people alleged to be victims of Fortunario.
On its website, the company describes itself as "a group of experts in the field of investing in digital assets and financial markets with technical analysis and macroeconomic studies related to cryptocurrencies and cryptocurrency arbitrage."
Bitcoin scams on the rise in Ecuador
The use of bitcoin and other cryptocurrencies in Ecuador is prohibited as a means of payment, but there is no regulation preventing investing with cryptocurrencies. For this reason, the number of platforms in the country that offer high profitability for grabbing users' attention is on the rise. And at the same rate, the scams are growing.
In fact, the Superintendency of Banks reported, between January 2021 and March 2022, the existence of 38 companies and institutions that are not authorized to operate in the financial, insurance and securities sectors.
Of these 38 unauthorized institutions, 10 offer bitcoin-related products. These include companies such as Mtcoin, Xapo, Elite Argotty, and KRC Kapital.
To detect a possible scam, the authorities issue a series of warnings. For example, Luis Espinosa Goded, a professor at the University of San Francisco in Quito, points out that there are five elements that users should consider when operating on cryptocurrency platforms.
Emphasize that the first warning is a guaranteed return of more than 10% per year. As a second key point, he recommends being wary of companies that have control of users' cryptocurrencies.
Espinosa Goded also believes that it can be a false investment when the profit or profit depends on the number of additional partners or customers that the user has to include in a certain platform or company. “In these cases, it's more like a pyramid,” she says.
He also believes that the most important cryptocurrency is bitcoin, and that the invitation to invest with other little-known cryptocurrencies should generate mistrust. And, finally, he invites us to be wary of companies that propose "a transformation of the way of life"; that is, as a kind of job, to solve their economic problems or to get rich.
