Prisoners allegedly led an extortion and laundering network using crypto to cover their tracks.
Brazil’s civil police have dismantled a crypto-powered extortion scheme, seizing around $45,000 worth of crypto assets in a major raid this week. The operation, which took place in the southern state of Rio Grande do Sul, revealed that inmates were coordinating the protection racket from within prison walls.
Local outlet Livecoins reported that police launched the action as part of Operation Timeo, targeting a group suspected of blackmailing and extorting auto garage owners across several municipalities.
Crypto and Shell Companies Used to Wash Racket Profits
The suspects allegedly funneled the proceeds of their crimes into digital wallets and shell companies, making it harder for law enforcement to trace the money trail. Authorities say the ring laundered their extortion gains through cryptocurrency transactions, shielding their financial activities from scrutiny.
Beyond the crypto seizures, the police also froze more than 13.3 million reais (~$2.3 million) in bank accounts tied to 11 individuals.
Police noted that one person was found to be illegally carrying a firearm, adding weapons charges to the ongoing investigation.
11 Warrants Executed Across 6 Cities
The raid involved 11 search and seizure warrants carried out by 60 agents across cities such as Porto Alegre, São Leopoldo, and Novo Hamburgo.
Investigators say the auto repair and resale sector was the primary target, with victims operating small, locally owned garages. The suspects would allegedly send intermediaries to demand money from garage owners — payment in exchange for “protection” from retaliation.
Operation Timeo Uncovers Prison Ties
According to the São Leopoldo Organized Crime Unit, the gang has strong connections to inmates who were arrested in earlier stages of Operation Timeo. The current round of investigations includes 10 people and one company, all believed to be extensions of that earlier prison-based network.
A police spokesperson mentioned that the scope of the case may grow, as investigators dig deeper into links between organized crime, crypto laundering, and business extortion.
Broader Implications for Crypto Enforcement
The raid adds to a growing body of evidence showing how cryptocurrency is being exploited by organized criminals in Brazil. It also follows recent changes in judicial policy — the Brazilian Supreme Court recently empowered judges to confiscate digital assets during financial crime probes.
