BRAZIL Law and Practice Contributed by: Octaviano Duarte, Henrique Forssell, Marcelo Lucidi and Mayara Rahman Rufino, Duarte Forssell Advogados
Despite the lack of legal provisions, case law has recognised a punitive aspect in the determina - tion of moral damages. This serves as a means to punish illicit acts and deter future abuses. 7.2 Laws to Protect “Banking Secrecy” Banking secrecy is a right guaranteed by the Federal Constitution and federal legislation. However, Law No 105/01 allows for the lifting of bank secrecy when necessary to ascertain the occurrence of any unlawful act, at any stage of the investigation or judicial proceedings. The law provides non-exhaustive examples of situa - tions in which this measure is allowed, such as in crimes committed against the national financial system, the public administration, Brazil’s tax system, and social security, as well as in cases of money laundering or concealment of assets. Brazilian courts also authorise the lifting of secrecy in cases of corporate fraud that have seriously harmed creditors and other stakehold - ers, such as financial pyramids, de facto groups structured with the aim of defrauding creditors, and large embezzlements of money and other assets. In these cases, the lifting of secrecy requires strong evidence of financial fraud. Furthermore, in the context of bankruptcy pro - ceedings, when bankruptcy is decreed, the judi - cial administrator takes the place of the compa - ny’s former management. This grants the judicial administrator the right and duty to access all of the company’s documents, including financial and bank statements, which is crucial for inves - tigating fraud against creditors. 7.3 Crypto-Assets In December 2022, the Brazilian Congress enacted Law No 14,478, which defines crypto - currencies (referred to as “virtual assets” in the law) and regulates significant aspects of this
market. According to Law 14,478, a virtual asset is defined as a digital representation of value that can be traded or transferred by electronic means and used to make payments or for investment purposes. This explicit definition establishes cryptocurrencies as property under Brazilian law. The law also introduces important regula - tions regarding the operations of crypto-asset exchanges. Exchanges now require authorisa - tion from a specialised federal body to oper - ate. Additionally, certain corporate transac - tions, such as transfers of control, mergers and demergers of exchanges, must receive prior approval. Furthermore, the law defines the crime of “fraud using virtual assets, securities, or finan - cial assets” , which carries a potential prison sen - tence of up to eight years. In cases involving fraud and where there is a risk of asset dissipation, parties can seek precau - tionary measures from civil and corporate courts to compel exchanges to provide information on suspicious transactions (such as wallet identifi - cation numbers, holder and beneficiary informa - tion, transaction hashes, etc). Freezing orders can also be requested, which, once granted, are binding on exchanges based in Brazil, obliging them to enforce the order. A particular challenge related to crypto-assets concerns the implementation of freezing orders. As Law No 14,478 has been in effect for a short time, not all Brazilian exchanges obtained proper authorisation to operate. Moreover, fraudulent transfers often involve wallets located in other jurisdictions, and many transactions are con - ducted through clandestine exchanges or by individuals maintaining anonymity. To address this challenge, co-operation with the Public Prosecutor’s Office and foreign judicial and gov - ernmental authorities is crucial.
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