A Brazilian bank collapse that cost depositors and insurers billions has now reached the country’s Supreme Court and presidential election.

Banco Master failed in November 2025 after attracting hundreds of thousands of savers with unusually high returns. Ten months later, allegations around its owner, Daniel Vorcaro, have pulled one of Brazil’s most powerful judges into the scandal.

On September 15, the Supreme Court is due to consider whether Justice Alexandre de Moraes should face an investigation over his contacts with Vorcaro. The hearing puts the court in the extraordinary position of examining one of its own members.

Brazil’s Biggest Banking Scandal?

Police evidence released this month alleges that the Bank’s owner Vorcaro contacted Justice Moraes shortly before his arrest. Moraes’ wife’s law firm also held a R$130 million contract with Banco Master.

Moraes denies wrongdoing. He has accused Justice André Mendonça, who oversees the investigation, of abusing his authority by releasing the material. The dispute has added a new layer to an already costly banking failure.

Banco Master had offered CDBs paying as much as 140% of Brazil’s CDI benchmark. It used that expensive funding to grow quickly while holding complex and illiquid assets.

Then the model broke.

Brazil’s central bank liquidated Master after citing a severe liquidity crisis and serious violations. The country’s deposit guarantee fund has since paid about R$40.2 billion to 722,000 clients linked to the group.

The legal consequences could extend further if investigators establish a conflict involving Moraes.

The legal consequences could extend further if investigators establish a conflict involving Moraes. “Potentially, but not automatically,” said João Luiz, managing partner at J. Pereira Advogados, when asked whether previous rulings could face challenges.

He said proven misconduct would not erase Moraes’ entire judicial record. However, defendants in individual cases could have stronger grounds to challenge decisions if they prove he lacked impartiality.

Meanwhile, the scandal has entered Brazil’s election campaign.

Senator Flávio Bolsonaro has called for Moraes’ removal and told supporters that voting for the current President Lula da Silva means supporting this scandal. 

“Anyone who votes for Lula is voting for Alexandre de Moraes,” said Bolsonaro. 

But even Bolsonaro is not free from this scandal. He also faces questions over financing linked to the Bank for a film about his father. He denies wrongdoing.

A bank that once sold extraordinary returns has now created a much larger problem for Brazil. This has now turned into a fight over trust in its courts, regulators and political system.

Source: BeInCrypto