In a decisive move, Brazil’s Internal Revenue Service and Federal Police seized approximately $1.6 billion worth of crypto and fiat. Both organizations launched an operation called Niflheim to dismantle a large scheme involving money laundering, tax evasion, and crypto fraud. This joint operation targeted multiple cities in Brazil, including Caxias do Sul, São Paulo, Fortaleza, and Brasília. Let’s take a closer look at what exactly happened.
Purpose of this operation
The focus of this operation was to expose the obscure financial activities of groups involved in cryptocurrency fraud. A total of 23 warrants were issued to tackle these illegal financial operations. Investigators discovered that two companies in Caxias do Sul processed more than R$34 billion between August 2019 and May 2024. The companies played a major role in money laundering and moving funds outside official banking channels.
The research found that it was a four-layer system:
evaders – These individuals and companies have converted money into cryptocurrencies. They have also underinvoiced imports and hidden income to evade taxes.
Orange companies – Shell companies were set up to receive money from the evaders.
Filter companies – These companies filtered the transactions to make their origins more difficult to trace.
Authorized Exchanges – These entities provided the final stage of crypto exchanges and hid the illicit funds.
Criminal networks exposed
Researchers Discover alarming details. More than half of the deposits into one of the companies came from individuals with criminal records. This data includes information on money laundering, drug trafficking and smuggling. The level of this activity gives an idea of how deeply crypto-related crimes are embedded in Brazil’s financial systems.
Authorities also identified import traders who made deposits. These transactions were likely linked to underinvoiced imports and tax evasion.
Seizures and International Operations
As part of Operation Niflheim, Brazilian police and tax officials have frozen approximately $1.6 billion worth of crypto and fiat held in bank accounts and cryptocurrency exchanges. They believe the total amount frozen could be as much as 9 billion reais.
Agents also revealed that they had busted three criminal groups involved in the massive scheme. These groups are believed to have moved 55 billion reais ($9.8 billion) using cryptocurrencies over the past three years. The money came primarily from drug trafficking and human trafficking.
The operation extended beyond Brazil. Police raided not only several Brazilian states, but also the United States, targeting businesses and individuals. The groups are believed to have sent money to recipients in China, the United Arab Emirates, the United States and Hong Kong. The suspected leaders of these groups are believed to be from Caxias do Sul and Orlando, Florida.
Cryptocrime in Brazil
The Brazilian IRS is closely monitoring crypto transactions. Rio Grande do Sul has become a hotspot for crypto-related activity. Between 2020 and 2024, more than 16,575 companies and 75,025 individuals made crypto transactions of more than R$ 10,000. The total value of these transactions was more than R$ 148 billion. One individual processed R$ 735 million, while one legal entity moved R$ 41 billion.
Brazil tightens crypto controls
Brazil is stepping up its efforts to combat cryptocrime. Authorities are using tools such as Normative Instruction 1888/2019 to track and regulate crypto transactions. The government is focused on stopping illicit financial flows. The message is clear: crypto-related crimes are being investigated seriously.
Operation Niflheim shows Brazil’s determination to stop cryptocrime. As the crypto market grows, the pressure on illegal activity only increases.
