Spanish Police Arrest Head of Billion-Dollar Crypto Arbitrage Platform on Fraud Allegations

Arbistar 2.0 operator Santiago Fuentes was arrested Wednesday and faces criminal fraud and money laundering charges in Spain.

By Danny Nelson

Oct 22, 2020 at 6:54 p.m. UTC

Updated Sep 14, 2021 at 10:22 a.m. UTC

Join the most important conversation in crypto and Web3 taking place in Austin, Texas, April 26-28.

Secure Your Seat

Danny Nelson

Join the most important conversation in crypto and Web3 taking place in Austin, Texas, April 26-28.

Secure Your Seat

Spanish National Police have arrested the operator of cryptocurrency arbitrage firm Arbistar 2.0 in a crackdown on the platform that researchers and investors allege to be a massive bitcoin Ponzi scheme.

Regional news outlet La Provincial reports operator Santiago Fuentes was taken into custody in Tenerife on Wednesday morning and was to have been formally charged with financial fraud and money laundering Thursday.
Fuentes' site serves around 120,000 users who together have invested 40,000 in bitcoin ($520 million) into its arbitrage trading bot, blockchain investigations firm Tulip Research told CoinDesk, adding that Arbistar 2.0 has raised over $1 billion in bitcoin total.
Investors began to accuse the platform of fraud last month when Fuentes claimed a "computer error" had disabled trading bot withdrawals and wiped out more than a quarter of funds, Tulip Research said.
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."
Fuentes has previously denied allegations that Arbistar 2.0 is fraudulent or bankrupt.

The arrest should serve as a reminder to crypto investors of the value bitcoin's traceable blockchain provides to investigators. While scammers can easily dupe unwitting investors with promises of high crypto returns, their use of bitcoin makes following the money easier.

DISCLOSURE

Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.

Danny Nelson

Learn more about Consensus 2023, CoinDesk’s longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.

Danny Nelson