Dutch police arrested three men in the industrial town of Deventer for attempting to defraud investors by selling them a self-made cryptocurrency and then intentionally sinking its price.
The police charged the men with fraud and embezzlement, and did not rule out additional arrests.
Police arrested one of the men at a Deventer warehouse that held several computers used for mining cryptocurrency, and that there “was also an issue of electricity theft,” according to a press release posted on the website of the National Dutch Police.
The arrests stemmed from an investigation of the cryptocurrency exchange Coinhouse.eu, which authorities have suspected of embezzling customers’ money and defrauding them.
In what authorities described as a pump-and-dump scheme, one of the men, a 39-year-old, produced the cryptocurrency and advertised it on a cryptocurrency platform and Twitter, luring investors and boosting the price. He then sold a large volume of digital coins over a short time frame, rendering them “worthless.”
The 39-year-old man is also suspected of similarly trying to scam investors using ERSO, MALC, EUROP and TulipMania digital currencies, the press release said.
During the investigation, police seized a house, vehicles, computers and cryptocurrencies.