AN alleged cryptocurrency fraudster has been arrested in Tenerife on suspicion of scamming users out of more than $1 billion (€846 million).

Santiago Fuentes was arrested in one of his many homes on the luxury island by Spanish police after allegations of making false promises on behalf of his bitcoin company, Arbicorp.

Fuentes encouraged users to invest into his Bitcoin bot investment platform in return for up to a 1% daily return.

Suspicions began to arise among users after their funds were frozen back in September, prompting fears of issues within the company.

It also emerged that due to a system glitch, Arbicorp had been overpaying its investors for 46 weeks, leading to it shutting down its primary trading bot.

A number of complaints were filed to the police with users unhappy with how the company was operating.

A police investigation began in earnest when the Arbistar trading bot was frozen, preventing users from accessing their money.

It is estimated that up to 120,000 users could have been affected by the potential scam and according to research by Tulip Research, a total of $1.07 billion (€850 million) had been raised.

Fuentes vigorously denies any wrong doing and claims he acted in good faith however local authorities have charged him with fraud, money laundering and belonging to a criminal organisation.

Police are currently conducting searches on Fuentes’ four properties, in which he alternated residence due to numerous threats on his life.