Acre's Public Prosecutors secured an injunction against TelexFree on June 13, 2013, imposing R$100,000 ($42,500 USD) daily fines. The order prohibited the company from enrolling new Brazilian affiliate investors or paying existing ones.

Following the injunction, top Brazilian affiliates reportedly instructed their downlines to register with TelexFree using fraudulent details. These credentials often suggested Brazilians were signing up as investors from the United States.

Acre's Public Prosecutor has not yet acted on these alleged circumventions. However, the presiding judge recently demanded TelexFree submit its full affiliate database. This suggests an investigation is underway, and fines may follow.

TelexFree lawyer André Andrade addressed the situation with iG, stating the company cannot verify the location of registrants. "I have no way of knowing if your registration is made by you from Brazil or by someone who lives in the United States," Andrade said. He affirmed that TelexFree does not accept affiliate registrations from Brazil. "If you are on the site (...) and put in U.S. data, with a (credit) card registered in the United States, I cannot investigate whether you are who you say you are."

iG noted TelexFree denies responsibility for payments made to affiliates in Brazil. The publication also observed that TelexFree's payment processor, i-Payout, allows users to select Brazil as a country of residence when depositing funds.

The company's eWallet payment system also permits Brazil as a residence. Affiliates claim debit cards used for withdrawals can be sent to Brazil and used at least seven local banks.

Andrade stated TelexFree International does not control these transfers. "The payments are made using international credit cards. As TelexFree, I do not have to know the fate of that payment," the lawyer explained. "As TelexFree, I have no control over the issuance of debit cards [through the eWallet]. They have control over shipping it somewhere as they are the company operating the card."

TelexFree's claims of ignorance about its affiliates' locations, eight months after the court order, raise questions. The company should have implemented basic "Know Your Customer" (KYC) controls. These measures typically include photo ID checks to verify user identities and locations.

KYC refers to due diligence activities financial institutions and other regulated companies must perform to learn relevant information about their clients. This process helps prevent fraud and money laundering.