October 27, 2020

An alleged Ponzi fraud breaks out with bitcoin led by the number 2 of the Spanish ‘Madoff’

The company Arbistar 2.0, based in Tenerife and directed by the Spanish Santiago Fuentes Jover, canceled the activity of its flagship product, called ‘Community Bot’ on September 12. In practice, this means that the more than 30,000 people – according to their data – who had their money in there cannot get it out. Some affected have already denounced Fuentes for misappropriation at the Santa Cruz police station. Now, they are organized so that all complaints indicate the number of the first report and the police associate them.

The independent website Tulip Research, which analyzes fraudulent activities on the blockchain, estimates the amount that would have entered their accounts at one billion dollars (850 million euros).

Arbistar operated like a classic pyramid scheme. A Ponzi of a lifetime. The attraction of investors was done by promising profitability with a cryptocurrency arbitrage robot. What is this? Bitcoins are sold in different exchange houses and their price does not always coincide, so the robot buys where bitcoin is cheapest and sells where it is more expensive. The client put his bitcoin in Arbistar and this offered him returns of 1% daily. In the long run, by reinvesting the earnings, the profitability could be very high.

“In practice it is fine, but it is difficult to achieve. I am a programmer and I made a small similar bot. They ate the commissions and did not get anything,” explains Manuel, one of those affected. “I said: these people will have experience, they will know more than I … We are going to trust them. They had been paying people every week for a year or so.” Manuel put in 0.7 bitcoin, which at that time was worth 7,000 euros, and that he had earned mining for another company.

“Why do I get involved in this mess? It is impossible to have a family or buy a flat today in Spain. Now I work in Dublin, I earn something more and I thought: I am going to invest it to see if tomorrow I can buy a home”, the Mint. “In the end, you are looking for money and a future.”

As in other schemes like this, the robot is nothing more than an excuse to attract people. For each client that you target, you also receive a commission, which increases your virality. The pyramid works for a time, in which the older users can take their profits. The gains are not more than the money of those who are entering. When someone sounds the alarm and more clients try to get their money, that is when the problem explodes, because there is not.

The company sent a statement arguing that he had had errors with the bot and that he had been paying more for a year, which had caused a hole in his accounts and forced him to close. He has promised to return their contributions to everyone in a phased manner, in the coming months. But industry experts are suspicious. “Santiago Fuentes has already been charged and got rid. He has several Ponzis. He knows exactly what he is doing,” summarizes a consulted person who publicly warned of the danger of Arbistar but prefers not to give his name in this article. Curiously, others who had been warning for months are Simón Pérez and Silvia Charro, who now give advice on trading.

This newspaper has tried to contact Arbistar, without having received a response at the moment.

Many years doing Ponzis

Santiago Fuentes was tried and acquitted in the case of the ‘Spanish Madoff’, Germán Cardona Soler. Cardona Soler was sentenced in 2017 to 13 years of pressure for a pyramid scam, Forex Finance, with which defrauded 350 million euros to 180,000 people between 2007 and 2010.

Fuentes was the leader of the network, who gave lectures and promoted the product. “The leaders are below the owner. They have the lip to convince people without financial knowledge. Then they say that they are victims, that they have also been scammed,” continues the previous consulted. “Sometimes they betray the owner, take his money and notify his referrals, which makes him break the pyramid.”

In the case of Arbistar, the treacherous leader was Elías Sayalero, who in mid-August recorded a video saying that his account had been closed. “But he comes from this sector and he knew he was a Ponzi. There are people who know perfectly well that they are in a pyramid scheme: they enter early, leave and earn money,” he adds.

The trajectory of Fuentes and its multiple pyramid businesses is documented on a website dedicated to multilevel scams. The most talked about after Forex Finance was GetEasy, dismantled in 2016, in which it participated as a leader. GetEasy promised investors to make money easily by buying products that were then rented to third parties. The difference is that this time Fuentes is the CEO and administrator of the company, which makes it difficult for him to excuse himself as a victim who did not know anything.

“My mother was scammed with the preferred ones and me with this”

Among those affected are people who put some bitcoin as an investment and others who were looking for a recurring income to complement their precarious income. During the quarantine, schemes like Arbistar went viral on WhatsApp and YouTube. According to traffic data from SimilarWeb, 56% of Arbistar’s traffic comes from YouTube and 31% from WhatsApp. Most of its visitors (33%) come from Spain. The young dropshipper Josef Brocki, known in these pages for having deceived hundreds of customers selling Chinese sandals, recorded an interview with Fuentes, which helped popularize Arbistar.

“I entered through a friend that I had been with since the beginning. I put my mother, my ex-husband and my partner in. All hooked,” says Cristina, an affected woman from Barcelona who was unemployed in February. “I was very fair and looked for something to throw away. I even asked for a loan because I saw it quite safe. Everything was going well until they told us that we could not withdraw more money. I want to face my payments and forget about it.”

Cristina had about 13,000 euros inside and trusted the platform for being Spanish. “I saw it for sure. The catchphrase is that you never lose. That’s why I got involved,” she says. “My mother was scammed with the preferred ones and me with this.” Another affected person from Colombia says that he invested his severance pay when he was fired during the pandemic, given the difficulty of finding a new job. It is no coincidence that this type of business sprang up during the previous crisis.

The Tulip Research firm warns of another Ponzi that is becoming popular: Kuailian, of which the CNMV, unlike Arbistar, has already alerted. “These businesses have been moved a lot by WhatsApp, Instagram …”, concludes the expert consulted. “But if it were true that they have a ‘bot’ to make money buying and selling bitcoin, they would not tell you. They would reinvest their profits. It does not make sense.”


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