Brazil's $190 million Ponzi scheme collapsed: How crypto investors can protect themselves

Source: Beosin

In April 2025, the Brazilian crypto investment platform Braiscompany Ponzi scheme was broken, and about 20,000 investors lost $190 million due to false high return promises. The mastermind was sentenced to 128 years in prison. This incident not only exposed the high risk of cryptocurrency investment, but also reminded us that in this market full of opportunities, it is crucial to protect our funds.

This article will take the Braiscompany case as a lesson to teach you how to identify Ponzi schemes and take practical measures to ensure investment safety.

Braiscompany scam: Why are investors fooled?

Founded in 2018, Braiscompany claimed to provide a fixed monthly income of 8% through cryptocurrency trading, attracting a large number of retail investors. However, investigations showed that the platform never made real investments, but used the funds of new investors to pay the "returns" of early investors, a typical Ponzi scheme. At the beginning of 2023, the platform stopped paying, the funding chain broke, and 20,000 victims lost all their money.

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 in the country's history for cryptocurrency scams.

Joel Ferreira de Souza, who was identified as the mastermind, was sentenced to 128 years in prison. Two others - Gesana Rayane Silva and Victor Veronez - were sentenced to 27 and 15 years in prison, respectively, for managing client funds and serving as key middlemen in the scheme.

The success of the scam is inseparable from the following factors:

• False propaganda: Braiscompany used aggressive marketing and faked high-profile partnerships to mislead investors.

• Lack of regulation: The Brazilian crypto market is weakly regulated and the platform has not undergone effective KYC/AML review.

• Money laundering network: Through shell companies and unregulated crypto wallets, the platform hides the flow of funds.

This case reminds us that the anonymity and decentralization of crypto investment bring freedom while also providing a breeding ground for fraud.

How crypto investors can identify Ponzi schemes

To avoid becoming the next victim, investors need to learn to identify the common characteristics of Ponzi schemes:

1. Excessive return promises: Any project that guarantees a fixed high return (the kind that is too high to be true) is worthy of suspicion. The crypto market is highly volatile, and fixed returns are often unrealistic.

2. Lack of transparency: The platform refuses to disclose the use of funds, investment strategies, or team background. For example, Braiscompany has 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 the market quickly.

4. Complex withdrawal restrictions: Braiscompany requires funds to be locked for one year, and difficulty in withdrawing funds is a typical feature of a Ponzi scheme.

5. Anonymous team: If the project team is unidentified or refuses to accept KYC (know your customer) verification, be extra careful.

After discovering these, users should immediately invest cautiously and conduct in-depth investigations.

Brazil's blockchain regulatory policy from this incident

In recent years, Brazil has actively improved the regulatory framework for blockchain and cryptocurrency to protect investors and combat fraud.

About the regulatory authorities

1. Central Bank of Brazil (BCB): responsible for regulating financial transactions, payment systems and financial activities involving cryptocurrencies. The Central Bank of Brazil is currently conducting a public consultation on this issue.

2. Brazilian Securities and Exchange Commission (CVM): mainly responsible for formulating and implementing regulatory policies for securities and other financial assets to ensure market fairness and transparency.

3. Brazilian Cryptoeconomics Association (ABCripto): The association is committed to establishing best practice guidelines for crypto market operations as an important measure for industry self-regulation. Although membership is not mandatory, it is generally regarded as an important reference indicator for reliable governance practices.

Current relevant legislation

1. Act No. 14.478 (2022): The Act establishes a regulatory framework for virtual asset service providers (VASPs), stipulating that all VASPs operating in Brazil must obtain a license in advance and strictly comply with anti-money laundering and counter-terrorism financing (AML/CTF) regulations.

2. Act No. 12.865 (2013): This act mainly regulates the regulation of the financial technology field. Although it is mainly aimed at traditional financial institutions, some of its provisions are also applicable to the cryptocurrency field.

Build a safe and compliant blockchain ecosystem

The Braiscompany case is a microcosm of the immature regulation of the global crypto market. The severe sentence of the Brazilian authorities (128 years in prison for the mastermind) shows that the government is stepping up its crackdown on financial crimes. However, law enforcement alone is not enough to eradicate the problem. The blockchain industry requires the coordinated efforts of technology and regulation.