Cryptocurrency Arbitrage Could Be a Crime, Says USP Professor

Cryptocurrency Arbitrage Could Be a Crime, Says USP Professor

The process of cryptocurrency arbitrage is known to traffickers, but could be classified as a crime in the eyes of the law. This analysis was made by USP Law professor, Renato de Mello Jorge Silveira.

The practice of cryptocurrency arbitrage consists of buying a currency on one exchange for a price and selling it on another platform for a higher price. In this way, traders can take advantage of the fluctuation of prices in the different companies in the market.

This is a common practice among attentive traders, but they are quick opportunities. So many are trying to create robots to track the movements and this is a promising market for many investors, although the risks are also high.

One is that precisely the oscillation is unfavorable and at the time of sale the price may be lower. But according to the Brazilian professor, the risk may be greater.

Cryptocurrency arbitrage must be analyzed and regulated not to be a crime

USP professor, attorney and president of the São Paulo Lawyers Institute, Renato de Mello Jorge Silveira, devoted an article on cryptocurrency arbitrage and its possible criminal use.

In the professor’s article, even referencing the work of Deltan Dallagnol, a former Republican attorney who worked on Operation Lava Jato, Renato begins by saying that arbitration of cryptocurrencies can be seen as money laundering.

This is because traders with this practice use alternative foreign transfer systems, accounts without clear identification and triangulation of financial transactions. While this is configured as money laundering, he says, it is activities “intrinsic to the legal world of cryptocurrencies”.

He recalled that many would not consider it a crime in principle when analyzing arbitration. On a deeper analysis, however, money laundering is the biggest risk of the practice, which the professor argues in his article should be regulated.

The regulation of cryptocurrency arbitrage cannot treat the activity as criminal, but only ensure that it is practiced in an acceptable manner, Renato said.

Financial Scams With Arbitration As “Background”

In recent years, several financial scams have used cryptocurrency arbitrage to convince customers to invest in programs that promise returns. Many, however, were nothing more than financial pyramids that only enriched the entrepreneurs.

In Brazil, for example, Atlas Quantum was responsible for tarnishing the image of the market with its alleged cryptocurrency arbitrage. Like them, Anubis Trade and the Bitcoin Banco Group also offered possible arbitrage schemes and left traces of financial scams for their investors.

Last week, the FBI announced the arrest of a 44-year-old man in the United States after he also promoted a cryptocurrency arbitration front company.

That is, in addition to the possible use of cryptocurrency arbitrage in money laundering, financial scams can draw attention to this practice being conducted in brokers.

Source: Live Coins