Arbistar: the fall of an alleged Spanish Ponzi with 120,000 affected | Markets

Promising its investors to achieve financial freedom, Arbistar 2.0, a Spanish company based in Tenerife dedicated to cryptocurrencies, managed to attract thousands of people to its platform. On September 12, the company issued a statement in which, blaming a computer failure, it reported that it was forced to freeze the accounts of its 120,000 clients. De facto, this means that no one can recover the money entered into the Arbistar system. Although the company has pledged to pay back its investment in stages, some of Arbistar’s clients find it difficult to recover their capital and are already organizing legal measures against the company for alleged crimes of fraud.

Santiago Fuentes Jover, the top leader of Arbistar, already has experience in dealing with accusations of a judicial nature. In 2017, the National Court sentenced the former head of Forex Finance, Germán Cardona Soler, known as the Spanish Madoff, to 13 years and three months in prison for the pyramid scam with which he defrauded 350 million euros to 180,000 people between 2007 and 2010. Santiago Fuentes held the position of director of expansion of Forex Finance. Fuentes, whose mission was to give conferences to attract clients for the pyramid scheme, was acquitted at trial.

The closure of the platform has already reached the law firms by the hand of a hundred clients who are looking to recover their investment. “Most of the people who have contacted the firm have invested bitcoin in the platform. The cases range from 0.1 bitcoins (910 euros) to ten of these coins (91,000 euros) that right now they cannot recover. It is no longer that they cannot obtain the supposed profit that they were going to have, it is that we are talking about that they cannot recover the money they invested, ”says lawyer Conchi Viera, leader of the law firm of the same name. Conchi Viera Abogados is currently preparing a criminal lawsuit that already represents more than 100 Arbistar investors.

Arbistar’s business is based, in theory, on cryptocurrency arbitrage. That is, buying a cryptocurrency in a market such as a bitcoin and selling it on a different platform at a higher price than the one that has been acquired. For those who deposited their bitcoins in Arbistar, returns of 1% per day were promised. The company – which has not responded to questions from this newspaper – sold its clients annual subscriptions of the computer software in charge of doing this arbitration task.

The company, which has a loyalty club in which old users earn money for each user they bring, boasts of obtaining returns thanks to a technology with which “winning is the only option”, as stated on its website. Those affected, on the contrary, accuse Arbistar of orchestrating a classic pyramid scheme in which the returns of the old users do not come from the investments but from the contributions of the new ones.

According to estimates by Tulip Research, a body dedicated to the analysis of companies looking for scams in the blockchain environment, Arbistar could have mobilized 1,000 million dollars (852 million euros).

The company has warned its clients that in the event that a client decides to take legal action against the company, that supposed return of the money that it said it was willing to undertake would be paralyzed “until the judicial resolution is determined.”

“What they are promising from Arbistar is to return the money in installments, specifically in July 2021 and another in July 2022. It is a proposal in exchange for agreeing to waive any legal action against them. But it seems quite complicated that if today you do not have five bitcoins, they will have it in July of next year, ”says Viera.

This refund proposal was modified for another few days later. Arbistar changed the refund method, offering users to return the money in products of the same company, including Arbicoin, a digital currency created by themselves, or money deposits that would be made on behalf of users in the loyalty club. Depending on the date of entry into the platform, investors have some conditions or others to recover the money they deposited.

Savers who invested in Arbistar now have several alternatives, as the lawyer explains: “They can do nothing, and wait to see what happens. Accept the agreement offered by Arbistar and whether it is paid or not, trusting that in two years’ time you will return the money. The third is for the Tenerife police investigations to end and take them to court to see if there is a crime. And the last one is to go to a lawyer to study the case and speed up the process ”.

“You can end them on the run in the first plane that leaves”

Affected

Dublin-based Manuel is one of Arbistar’s investors. Last July, he deposited 0.7 bitcoins on the platform, the equivalent then to about 7,000 euros. “I got to know the platform a year ago but it didn’t give me confidence. However, I found out that they had been paying on time every Saturday for months, ”he says. As soon as the accounts were frozen, Manuel became one of the administrators of a Telegram group that already has 1,700 affected. “At first there was disbelief. I sincerely believe that they got into the company’s accounts. There will be a carryover, but they will not be able to pay everyone and they try to buy time to get more income or maybe leave. Mismanagement can end them going as far as possible on the first plane that leaves, ”he warns. The investor delves into the return of the money raised that Arbistar has been making and says that when the company has returned something, they have been ridiculous amounts, “they have paid 1,100 bills.” “I will fight the 0.7 bitcoins, but I doubt that I will have them back,” he concludes.

Legislation

The European Commission announced last week the first regulations on cryptocurrencies and the platforms on which they are traded in the European Union, with which it is intended to prevent fraud against savers.

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