Another major cryptocurrency scam has been taken down after the national police of Tenerife arrested Santiago Fuentes, accused of defrauding at least 120,000 people with a Bitcoin scam.
Fuentes was the mastermind behind ArbiStar 2.0, a company that claims to have developed a series of mathematical algorithms to create a so-called Bot that is “successful in cryptocurrency arbitration.”
With this fake product, ArbiStar amassed investments in Bitcoin by guaranteeing massive profits.
The scam company was based in Playa Las Americas, and an investigation was launched by the authorities after the company’s clients filed a lawsuit accusing the firm of operating a pyramid scheme.
The company’s clients speculated that ArbiStar 2.0 is a scam after the company abruptly announced the cancellation of its so-called Community Bot project, on September 12.
Following this, customers were not able to access the Bitcoin they invested in the company. Fuentes repeatedly claimed at the time that the sudden cancellation was due to a “computer error”, and assured customers that this wasn’t a scam.
Fuentes continued lying to his investors
He even appeared in a YouTube video on the official ArbiStar YouTube channel on September 14th, explaining the reason for stopping the project and how the refund payments will be made. He claimed that the Bot product was mismanaged, and as a result, the development was stopped.
He continued denying that there was “a scam or a bankruptcy”, by stating that he did not run away, citing the fact that he had shot the video in his own home as proof that he wasn’t hiding or running.
“When I warned clients that this particular product was being closed, I was at my house and you will understand that if the intention was to scam, no one would act in this way.”
Meanwhile, Fuentes was alternating between four of his residences that he owned in Tenerife. He claimed that he was doing this because he received threats, adding that he closed his local offices because of these threats.
According to local media outlet La Provincial, the police were convinced by Fuentes’s lies and raided all four of his residences and arrested him on October 21. He was charged with fraud, money laundering, and having ties to a criminal organization.
With this scam, Arbicorp managed to raise €850 million ($1.07 billion), as reported by blockchain analytics firm Tulip Research.
The local report also cited lawyer Gerardo Sanchez who stated that the penalty for operating a scam in Spain can be up to 4 years in prison. If the crime is flagged as aggravated fraud, the jail term could be up to 8 years.