Authorities uncover jail-run extortion scheme targeting small businesses across southern Brazil.
Brazilian authorities have seized $45,000 in cryptocurrency in a sweeping operation targeting a protection racket ring that allegedly extorted money from local business owners in Rio Grande do Sul.
According to a report by Livecoins, the operation revealed that the racket’s leaders were inmates managing the scheme from prison. Police say the group orchestrated the entire fraud and extortion network while serving sentences behind bars.
Crypto Used to Launder Extorted Funds
The raids were part of Operation Timeo, a broader initiative led by the Polícia Civil of Rio Grande do Sul (PCRS) to dismantle organized crime. Officials confirmed that the group not only extorted small business owners but also laundered the proceeds through crypto wallets and shell accounts.
In addition to seizing tokens from multiple wallets, the police froze 13.3 million reais (about $2.3 million USD) across bank accounts linked to 11 suspects. One of the accused was also charged with illegal firearm possession.
Authorities believe the gang targeted automobile garage owners, forcing them to pay “protection” money under threats of violence or property damage.
Multiple Cities, Dozens of Officers Involved
The police operation spanned six cities, including Porto Alegre, Novo Hamburgo, São Leopoldo, Portão, Cachoeirinha, and Imbé. Around 60 PCRS agents executed 11 search and seizure warrants during the raid.
The São Leopoldo organized crime unit led the charge, coordinating efforts between departments across the region. Officials suspect the group has ties to businesses and individuals in Estância Velha, Ivoti, Sapiranga, and beyond.
The garages involved were primarily owned by independent auto dealers and repair specialists, who were allegedly pressured by the gang to make payments in exchange for safety.
Links to Inmates Under Investigation
Police say the operation is ongoing and currently involves 10 suspects and one business. All parties are believed to be connected to prisoners previously arrested during earlier phases of Operation Timeo.
Investigators noted that the case could expose a larger criminal network involving not only extortion but also crypto-based money laundering schemes.
A PCRS spokesperson stated that the use of shell companies and digital currencies allowed the criminals to process large sums of money quietly and efficiently, making tracking more difficult.
Crypto Seizure Powers Expanded by Courts
The bust comes just weeks after Brazil’s Superior Court expanded judicial powers, granting judges authority to freeze crypto holdings in cases involving financial crimes or defaults. This legal development has made it easier for law enforcement to pursue funds that might otherwise evade traditional tracing methods.
