Banco Master collapse drags Brazil’s Supreme Court into scandal

Banco Master failed in November 2025. Brazil’s deposit guarantee fund has paid about R$40.2 billion to roughly 722,000 clients linked to the group, and police say the bank’s owner, Daniel Vorcaro, contacted Supreme Court Justice Alexandre de Moraes shortly before Vorcaro’s arrest.

The bank had attracted hundreds of thousands of depositors with certificates of deposit that promised returns up to 140% of Brazil’s CDI benchmark. Regulators say Master relied on costly short-term funding while holding complex, illiquid assets that became hard to sell when markets tightened.

Brazil’s central bank declared a severe liquidity crisis and cited serious regulatory breaches before moving to liquidate the group. Authorities say the combination of expensive liabilities and risky assets left the bank unable to meet obligations when funding conditions changed.

Police documents released this month also note that a law firm connected to Moraes’ wife held a R$130 million contract with Banco Master. Moraes has denied any wrongdoing and accused Justice André Mendonça, who oversees parts of the probe, of abusing his authority by making the material public.

On Sept. 15 the Supreme Court will consider whether to authorize a formal investigation into Moraes, in an uncommon case of the court examining one of its own members. The hearing follows months of inquiry into the bank’s collapse and the leak of police evidence.

João Luiz, managing partner at J. Pereira Advogados, said proven misconduct would not automatically erase a judge’s entire record, but it could strengthen defendants’ grounds to seek reviews of individual rulings if impartiality is established.

Senator Flávio Bolsonaro, a prominent conservative and son of former president Jair Bolsonaro, has demanded Moraes’ removal and told supporters, “Anyone who votes for Lula is voting for Alexandre de Moraes.” Bolsonaro is also facing questions about financing tied to Banco Master for a film about his father; he denies any wrongdoing.

Prosecutors and investigators continue to examine possible links between Banco Master’s leadership and public officials. The liquidation, criminal probes and related court actions have left savers, regulators and several government branches involved in ongoing legal and administrative proceedings.