Seven arrested in RainbowEx Ponzi scheme investigation

Seven people linked to the RainbowEx Ponzi scheme were arrested as part of a large-scale operation launched Thursday by a prosecutor’s office in the town of San Pedro, Buenos Aires province. The pyramid scam first made headlines in Argentina in October when stories of newfound riches began popping up over San Pedro. It is estimated that 12,000 to 20,000 people from that 70,000-inhabitant town invested in the scam , making thousands lose their savings.

During the operation, which took place on Thursday, 22 locations in San Pedro and Bahía Blanca city were raided. The investigators identified 20 people as part of the scheme and requested Interpol issue red alerts for the international arrest of two Malaysian citizens involved in the scam. Six people were arrested in San Pedro and one in Junín, a judicial source told the Herald.



The investigators also requested that all cryptocurrency wallets and bank accounts of the accused be frozen and seized. The total sums in these accounts are approximately US$3.5 million in the USDT stablecoin.

According to a press release issued by the prosecution’s office, it was the first time that Argentina requested the freezing of assets in USDT directly to Tether Limited, the company based in the British Virgin Islands that issues that cryptocurrency stablecoin. During the operation, the investigators seized AR$30 million in cash (US$28,455 at the official rate) in Argentine pesos, U.S.

dollars, euros, and yuan, as well as computers, cell phones, memory cards, pen drives, and firearms. Prosecutors María del Valle Viviani and María Verónica Marcantonio from San Pedro led the investigation team, which also included cybercrime specialists and prosecutors from San Nicolás, Junín, and Bahía Blanca. The detainees have already been interrogated by the prosecution.

Fifty-seven victims have already testified since the beginning of the investigation. San Nicolás Federal Prosecutor Matías Di Lello was investigating the platform for unauthorized financial intermediation and money laundering, but closed the investigation once he demonstrated that there was no financial intermediation whatsoever. According to the local newspaper La Opinión , three of the arrested people — Maximiliano Braga, Alexis Pan, and Luis Pardo — are the ones who made the most money from the Ponzi scheme.

They were also the figureheads for the scam. Rainbowex was presented as a crypto trading platform that promised an extraordinary profit in U.S.

dollars of between 1 and 2% per day. Managed by a foundation called Knight Consortium, the company would send a nightly “signal” via the Telegram messaging service indicating which cryptocurrency was worth buying and what yield it would give. The person who sent the messages called herself Ali and used the avatar of an Asian woman.

People in San Pedro nicknamed them La China — “the Chinese woman.” However, the investigation proved that there was no investment in cryptocurrencies. RainbowEx was a mere Ponzi scheme in which the funds of new investors were used to pay old investors, “creating an illusion of legitimate profits,” according to the San Pedro prosecutor’s office.

On October 7, their “wallets” became frozen and the investors could no longer withdraw their money. “They are fake platforms, it looks like you are doing some financial trading, but in reality they are mock-ups, they are simulators,” Economist Martín Burgos, co-author of a book on cryptocurrency, told the Herald. “ But people do not know anything, so they get into it and think they have become market traders.

” Burgos said that pyramid and Ponzi schemes involving alleged cryptocurrencies are booming in Argentina due to record inflation, the rise of influencers, and the fact that “market trading” is well-seen in the country. He said that even Argentine president Javier Milei used to advertise CoinX, a crypto company investigated in Argentina over alleged scams..