$1 000 000 000 USD
DESCRIPTION OF EVENTS
Arbistar "Develops and Distribuites Trading Bots: Winning Is The Only Option." "Discover How To Reach Your Financial Freedom." "Arbistar 2.0 Team has created the first software for the automatic arbitrage of cryptocurrencies."
"There are 9.6 million traders that operate online. Basically, 1 out of 781 people on the planet trade online. Find out how what Arbistar can do for you." "Arbistar 2.0 is a series of online automated trading bots that are able to operate in different scenarios and markets, helping you on making money online. The version 2.0 of the platform was created in January 2019 replacing the first, here’s the name 2.0. It’s an evolution of the initial project that began in September 2018. We base our philosophy on creating technological solutions with built-in freedom."
"We are located in Tenerife (Canary Islands) Spain with offices open to anyone, whether they are clients or not. Send an email to request an appointment. We currently have a staff of more than 30 people between working for the company." "Arbistar2.0 squad has many years of experience in trading, market analysis and software development. We’re a group of highly qualified and close-knit professionals. Our team of engineers, designers, marketers and analysts are dedicated every day to offer you high-tech products and make your life better. Arbistar 2.0 mission is simple: give our clients financial freedom."
"We belong to the ZEC (Canary Islands Special Zone), an entity that brings together the most prestigious companies in the Canary Islands with a strict and difficult control to become a part of it. It allows us to obtain very interesting tax advantages that we use to reinvest in our company."
"Fuentes first popped up on BehindMLM’s radar in 2014, as a top investor in Global Unity. Global Unity was a scam tied to the WCM777 Ponzi scheme."
"In 2015 Fuentes emerged as a top investor in MoneyBox TV, another Ponzi scheme. Fuentes’ Arbistar corporate bio addresses his involvement in fraudulent investment schemes."
"[T]here have long been strong suspicions about the returns that Arbistar’s software appears to generate." "The financial forensic company Tulip Research has repeatedly warned users that Arbistar is a multi-billion-dollar encrypted Ponzi scam."
"ArbiStar has no retailable products or services, with affiliates only able to market ArbiStar affiliate membership itself." "ArbiStar pays referral commissions via a unilevel compensation structure."
"A unilevel compensation structure places an affiliate at the top of a unilevel team, with every personally recruited affiliate placed directly under them (level 1). If any level 1 affiliates recruit new affiliates, they are placed on level 2 of the original affiliate’s unilevel team."
"If any level 2 affiliates recruit new affiliates, they are placed on level 3 and so on and so forth down a theoretical infinite number of levels. ArbiStar caps payable unilevel team levels at ten."
"A 2% referral commission is paid on returns paid to unilevel team affiliates. Another 2% is paid on unilevel team reinvestment. A separate one-time 6% referral commission is paid on unilevel team personal bot sales. Note that upon signing up and investing, ArbiStar affiliates are limited to five unilevel team levels. To unlock levels six to then they must personally convince others to invest at least €30,000 EUR."
"How did Santi Fuentes, someone with no verifable trading history, stumble across a trading bot that generates, in his own words, up to 1% a day? No idea. Neither ArbiStar or Fuentes explains that. What we do know is Fuentes’ launched ArbiStar following involvement in a series of Ponzi schemes."
"And even if we give Fuentes the benefit of the doubt, ArbiStar is still committing securities and pyramid fraud. At the time of publication Alexa estimates Italy (31%), Spain (27%) and Mexico (11%) are the top sources of traffic to ArbiStar’s website. In Fuentes’ native Spain, securities are regulated by the National Securities Market Commission. In Italy it’s the Italian Companies and Exchange Commission and in Mexico, the National Banking and Securities Commission. ArbiStar provides no evidence of having registered itself with either of these regulators, meaning the company is operating illegally."
"Pyramid scheme commissions are also a problem, because ArbiStar neither sells nor markets anything to retail customers. As it stands the only verifiable source of revenue entering ArbiStar is new investment."
"Either Santi Fuentes woke up one day and worked out how to generate 1% a day on autopilot, or ArbiStar is a Ponzi scheme."
"The investigation began last September following cases brought by some clients who accused the company of creating a pyramid scheme. On September 12th, Arbistar eliminated one of its products, the so-called Community Bot, effectively removing the possibility for over 32,000 people to access their deposits, estimated at 9.34 million euros."
"The team of crypto company Arbistar announced that it will close the trading tool Community Bot. The operator said that all funds on the platform are currently frozen and prevent users from withdrawing funds." "The firm froze user funds in September, blaming a glitch in the system that led it to overpay its clients. Spanish police arrested the founder Santiago Fuentes but later released him." "[T]he company shut down one of its most popular tools, rendering users unable to access their funds."
"Arbicorp, the parent company which developed the digital currency trading bot Arbistar, has been accused of defrauding over $1 billion from investors." "[A] lawyer leading the charge for justice against the firm is urging authorities to do more for the victims. In an interview with Spanish outlet elDiario, Carlo Aranguez criticized the pace of the judicial process against Arbicorp." "The alleged Ponzi scheme defrauded over 32,000 investors, Aranguez told the outlet."
“It’s not acceptable that in the face of the largest computer scam in our country, justice is not forceful.”
"Arbistar CEO stated that it will return investors' funds from September 15th. If users resort to law, they will freeze the funds and wait for judicial settlement." "Arbicorp claimed that it has been overpaying its investors up to 28% more as a result of the glitch for 46 weeks now. This has led to critical financial issues at the firm which led to the shutdown of the Community Bot, their most popular product."
“Starting from this Thursday (September 16[, 2020]), we will start paying all the clients,” he stated. “There will be a payment plan which will be done daily, approximately 2,000 clients every month will be receiving their money, distributed daily. As a minimum, they will get back the money they invested.”
"Regional news outlet La Provincial reports operator Santiago Fuentes was taken into custody in Tenerife on [Oct 21, 2020] morning and was to have been formally charged with financial fraud and money laundering [Oct 22, 2020]." "[O]fficers of the National Police and officers of the Provincial Judicial Police Brigade arrested Santiago Fuentes Jover, owner of the Arbistar 2.0 company based in Tenerife." "The arrest took place in one of the four houses owned by Fuentes, together with searches of the premises, following a transfer to the Police Headquarters. The arrested person is expected to go to Court no. 3 in Arona, to be charged with fraud, affiliation to a criminal organization and money laundering."
"According to El País, judge José Luis Calama agreed to investigate Arbistar 2.0 SL, as victims of the alleged scam are almost 1,127. Still, authorities believe the number could be as high as 32,000." "Tulip said it has linked some of Arbistar's withdrawal activity to dark-net market Hydra. It called the platform's frequent crypto returns (up to 1% daily) and limited withdrawal opportunities (only on weekends) elements of a "classic Ponzi scheme."
"The lawyer [representing victims] noted that scams like Abicorp are gaining popularity across Spain. He attributed this to the failure of traditional financial and investment systems which have disadvantaged smaller investors. They, in turn, explore riskier options which in some cases like Abicorp, end up being scams."
Arbistar was not a cryptocurrency exchange, but rather a simple scheme where investors would pay upfront money for future returns, with extra bonuses for recruiting others.
Where did those returns come from? From a trading bot that is supposedly the first bot ever to be able to consistently generate an arbitrage profit. And they don't have enough funds from big investors that they can compound, so they need retail investors to participate.
After investors were duped to the tune of $850m euros with zero visibility into their funds, the company announced they'd been overpaying clients for a long time, and promised a repayment if no legal action was taken.
It would seem that they certainly have been overpaying their clients, and of course the legal actions will continue.
HOW COULD THIS HAVE BEEN PREVENTED?
One of the primary issues, as pointed out by the victim's legal team, is that retail investors are excluded from legitimate investment opportunities. In a sense, this forces both investors and platforms "underground" where there are no protections, education, or limits at all.
With schemes like this, it's relatively easy to demonstrate that it's fraudulent by requiring evidence of the backing of customer assets on an ongoing basis. This can come through third parties or blockchain-based solutions.
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Class-action lawyer against $1B Arbistar scam calls for forceful legal action - CoinGeek (Aug 2)
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Arbistar 2.0 | Develops and Distribuites Trading Bots: Winning Is The Only Option (Aug 2)
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Spanish Police Arrest Head of Billion-Dollar Crypto Arbitrage Platform on Fraud Allegations - CoinDesk (Aug 2)
Founder of Arbistar, Santiago Fuentes, was arrested - The Cryptonomist (Aug 2)
National Court of Spain Takes the Investigation of the Alleged Ponzi Crypto Scheme Arbistar – News Bitcoin News (Aug 2)