Brazilian Investor Seeks Justice After Bitcoin Seizure Following Kidnapping
A legal battle that began in 2022 has taken a new turn in Brazil. A recent forensic analysis, requested by an investor who was kidnapped in Ribeirão Preto, São Paulo, has revealed crucial details about the theft of his Bitcoin. Kidnappers forced the victim to reveal the private key to his Trezor wallet, which held 15 Bitcoins. At the time, these were worth just over R$2 million, but today they are valued at R$8.5 million. The criminals drained the entire amount in a single transaction.
The investor alleges that part of the stolen funds ended up on Binance and Bitso, and is now suing Binance.
According to the forensic report, Binance received some of the transactions from suspicious accounts. After that, the trail of funds to the criminals’ known addresses disappears.
The victim’s lawyer claims that Binance allowed the funds to flow through its platform, even after being alerted about the theft, proof of ownership, and the relevant addresses. Binance has declined to comment on the specific case.
Expert Uncovers Money Laundering Techniques Used to Obscure Stolen Bitcoin
The court-appointed technical expert stated that the criminals used multiple transition addresses to launder the money. They then divided the 15 stolen Bitcoins into smaller transactions, using layering and smurfing techniques.
The expert also noted that the kidnappers demonstrated knowledge of Bitcoin address manipulation, using addresses with no prior or subsequent activity.
“Based on the technical analysis, it is evident that the movement of 15.08322957 BTC, extracted from the victim’s wallet, follows a pattern consistent with cybercrimes involving crypto assets.”
“The rapid fragmentation, use of multiple wallets, sequential temporal movements, and the lack of address reuse after receipt indicate deliberate obfuscation techniques, strongly suggesting the use of methods such as smurfing, layering, and possibly mixers or routing services.”
“Furthermore, the addresses indicated by the plaintiff as belonging to Binance and Bitso exhibit a graphical and behavioral structure compatible with institutional exchange wallets, supporting the plausibility that the diverted assets may have reached them,” the expert concluded.
Binance Cites Security Measures, Declines to Comment on Ongoing Legal Matters
Binance stated that it does not comment on ongoing legal investigations. However, the exchange emphasized its commitment to security.
“Binance does not comment on ongoing investigations, but reinforces that security is a priority and that it has one of the most robust compliance and security programs in the sector and makes continuous investments to strengthen the protection of users and their resources, with the adoption of cutting-edge technology and partnerships with the most renowned cybersecurity companies and technology providers in the blockchain space. In 2024 alone, Binance prevented potential losses of US$4.2 billion for 2.8 million users.”
“Binance also dedicates constant efforts to user education, across all its communication channels, disseminating good practices and tools for account protection. Among them:”
- KYC (or identity verification), required for all users;
- Two-factor authentication (biometrics and security keys, authentication app, email, and phone number);
- List of authorized devices;
- Withdrawal address management (listing addresses authorized to receive transfers);
- Constant app updates with new security elements.
Investor’s Legal Team Alleges Negligence
Cryptocurrency lawyer Raphael Souza, representing the investor, argues that Binance failed to heed the investor’s warning, allowing criminals to operate freely on the platform.
“The victim warned, proved ownership of the crypto assets, and yet the exchange ignored the alert. The result? Stolen assets after a kidnapping ended up being moved within the platform itself. Receiving money from a crime and continuing to operate as if nothing happened is assuming legal risk — and the responsibility to compensate the victim comes with it,” Souza said.
Despite the recent forensic report favoring the client, the dispute between the kidnapped investor and Binance remains open in São Paulo courts.
However, a recent ruling by the Superior Court of Justice (STJ) in a dispute involving Mercado Bitcoin established that Brazilian exchanges are liable for damages to clients.
Police Operation Targeted Kidnappers Across Multiple States
Despite attempts to conceal the Bitcoin’s trail, authorities quickly identified the criminals. The Civil Police of São Paulo launched Operation Kirvem in November 2022, just months after the crime.
The operation involved 50 agents, working in coordination across Ceará, Maranhão, Tocantins, and São Paulo.
The ordeal began with the kidnapping of the investor’s wife from a supermarket. The case is one of the most notable to occur in Brazil, as the criminals knew the investor’s wallet model before the attack.
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