Bolivia’s Government Arrests 60 People Over a Pyramid Scheme – Not Bitcoin

By Kevin Helms -  May 30, 2017

The Bolivian government recently arrested 60 people over a pyramid scheme that claims to invest in bitcoin. However, the focus was on the scheme and not on bitcoin itself, even though the government banned the digital currency back in 2014.

60 Arrested Relating to ‘Pay Diamond-Bitcoin’

Bolivia’s Autoridad de Supervisión delSistema Financiero (ASFI) on May 19 announced that 60 people had been arrested for promoting “virtual currency investments”. The country’s federal banking, finance, and securities regulator states (loosely translated):

The arrest of 60 people, who were presumably conducting training related to the investment in virtual currencies, reminded the population that this activity is prohibited in the whole national territory.

The government’s announcement did not specify whether these activities were related to bitcoin. However, El Deber reported that they were related to a known pyramid scheme called “Pay Diamond-Bitcoin,” which the authorities have kept an eye on for some time.

Pay Diamond-Bitcoin is similar to a larger scheme called Pay Diamond which is also being investigated by the Bolivian government. Pay Diamond, believed to have swindled some 200,000 people, claims to buy, process and sell diamonds to the gemstone industry.

Arrests Focused on Pyramid Schemes

Bolivia’s Government Made 60 Arrests Over a Pyramid Scheme - Not BitcoinThe arrests were made by Bolivia’s Crime Fighting Special Forces (FELCC), and pamphlets used in the training were confiscated. According to ASFI Executive General Directorate, Lenny Valdivia Bautista, the meeting took place at the Cine Center of Santa Cruz de la Sierra.

They were “carrying out training activities related to the investment of money with characteristics of multilevel activities,” she detailed. “This type of activity is related to pyramid schemes” with the sole purpose of appropriating money and the savings of the Bolivians, the announcement warns. Valdiviaalso urged Bolivians to protect their savings and their families’ well-being by reporting these “unlawful activities” to ASFI or the FELCC.

The announcement also reveals that:

To date, ASFI is in the process of drawing up a draft bill that will allow the inclusion of Pyramid scams in the Penal Code.

Another Pyramid Scheme: ‘Bitcoin Cash’

Bolivia’s Government Made 60 Arrests Over a Pyramid Scheme - Not BitcoinAnother recent bust by the Bolivian government concerns a separate pyramid scheme and scam called “Bitcoin Cash.” This scheme, surfaced in April, is similar to Pay Diamond-Bitcoin.

The company promised to make investments in cryptocurrencies, mining abroad, and buying and selling bitcoins, La Razon Digital reported. However, once the scheme’s administrators got money from their victims, their website failed and the company no longer responds to queries, one victim told the publication.

Last week, scam victims looking for refunds of their investments from Bitcoin Cash attacked the company’s office in desperation, taking matters into their own hands. The angry mob reportedly burst into the office, took out their furniture, and set it on fire.

Bolivia’s Government Made 60 Arrests Over a Pyramid Scheme - Not Bitcoin

Angry victims burned Bitcoin Cash’s furniture

Bitcoin’s Status in Bolivia

Bolivia’s Government Made 60 Arrests Over a Pyramid Scheme - Not BitcoinIn June 2014, Bolivia’s central bank officially banned the use of bitcoin and other cryptocurrencies in the country. The bank states at the time that “It is illegal to use any kind of currency that is not issued or controlled by a government or an authorized entity.” Public Resolution Number 044/2014, dated May 6, 2014, prohibits the use of any coins not issued or regulated in the country. Among them are “bitcoin, namecoin, tonal bitcoin, ixcoin, devcoin, freicoin, 10coin, liquidcoin, peercoin, quark, primecoin, feathercoin and others that do not belong to any country or economic zone,” the regulation states.

Valdiviareiterated this status in the recent announcement, adding that “it is important to urge the population to denounce these cases in which people try to take advantage of people’s savings and saving families.”

Bolivia’s Government Made 60 Arrests Over a Pyramid Scheme - Not BitcoinShe indicated that ASFI, in coordination with “competent judicial authorities,” will enforce the law on any businesses nationwide that use virtual currencies or pyramid schemes.

Boliviawas not the only country to ban bitcoin and other cryptocurrencies in 2014. Nearby Ecuadormade a similar move. Bitcoin.com recently reported on how the use of bitcoin continues to grow there despite the ban.

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