Three individuals are facing prosecution for investment fraud and unauthorized business operations through Cryfin, with clients suffering estimated damages of CZK 1.1 billion. The National Centre against Organized Crime spokesman, Jaroslav Ibehej, confirmed that 564 people and companies were defrauded.
Cryfin, which operated in the unregulated cryptocurrency market, allegedly collected money from the public without proper authorization, enticing investors with false promises of management, investment, and unrealistic appreciation based on their investments. Instead of fulfilling their contractual obligations, the defendants used the raised funds to finance their lavish lifestyles, including expensive living expenses, car rentals, luxurious premises, and marketing costs. They also used the money to pay brokerage commissions and to provide some clients with supposed profits to lure in new victims.
Ibehej stated that the operation bore the characteristics of a “Ponzi scheme,” where investors are convinced to entrust their money with the prospect of high returns. However, the operators keep the funds rather than investing them, only paying out a portion of the money to some investors as supposed profits, in an attempt to attract new investors. Eventually, when the funds run dry, the scheme collapses.
In connection with the case, authorities conducted a large-scale raid last year, seizing approximately ten million crowns in accounts, virtual currency ethereum, and real estate worth around 12 million crowns. The Financial Analysis Bureau played a crucial role in cracking the case.
All defendants remain at large and face potential sentences of up to ten years in prison. The High State Prosecutor’s Office in Prague is overseeing the case.
In January of this year, it was reported that the company owned by young entrepreneur Václav Holler had dismissed its employees and left its offices in Prague’s Burzovní palác following the raid. A Cryfin spokesperson claimed that the firm’s account held more funds than clients’ deposits due to an “appreciation” before the police intervention. The spokesperson asserted that the clients’ money could not be returned due to the police actions.
The police headquarters are reiterating their warning to the public to exercise caution when investing in products that promise unusually high returns. They stress that this type of crime is frequently encountered by law enforcement.
