A majority of financial pyramids identified in 2022 used cryptocurrencies in one way or another, Russia’s central bank has announced in a new report. Amid Western sanctions, Russian scams have stepped up their activities, often claiming to be authorized by foreign authorities to offer access to crypto assets.
Russian Pyramids Take Advantage of Western Sanctions and Crypto Popularity
More than 56% of pyramid schemes in the Russian Federation in the first half of the year, or 537 entities, raised funds in various cryptocurrencies or announced crypto investments, reveals a report devoted to the fight against activities illegal in the country’s financial market. The document was published by the Central Bank of Russia (CBR).
Quoted by RBC Crypto, the regulator pointed out that the sanctions imposed by the West over the conflict in Ukraine have radically changed the working conditions of legal financial institutions in Russia and that fraudsters have taken advantage of the situation.
Russians were looking for other ways to invest, and the answer to that demand came in the form of new financial pyramids. The monetary authority explained that these were mostly small-scale and short-lived programs.
Between January and June 2022, the central bank was able to identify an impressive number of these scams – more than 2,200 companies, projects and individual entrepreneurs whose operations showed signs of illegal financial activity. The report notes that the number is three times higher than the figure for the same period in 2021.
Crypto isn’t the only area these entities have taken an interest in, as 671 of them targeted the securities market. According to the CBR, these companies often claim to be licensed by a regulatory body in a different jurisdiction and collect money exclusively in foreign fiat or cryptocurrency.
To curb their activities, the Bank of Russia notified law enforcement agencies, the Federal Tax Service, the Roskomnadzor telecommunications watchdog and domain name registrars. The CBR also takes regular steps to block suspicious websites and maintains a blacklist of entities that may be operating illegally in the country’s financial sector.
The Central Bank of Russia has already recorded an increase in the number of new financial pyramids exploiting the crypto theme in May. Another reason for their growth has been financial uncertainty which has spurred interest in programs around investment opportunities in the digital asset space.
Meanwhile, the Russian Interior Ministry suggested this week that authorities in Moscow should introduce criminal liability for those who provide money laundering services to crypto fraudsters. These so-called “droppers”, sometimes unsuspecting individuals who allowed scammers to use their bank accounts and crypto wallets, can face up to seven years in prison for their involvement, if lawmakers accept the ministry’s advice. .
Do you think the number of crypto pyramids in Russia will continue to grow, despite the market downturn? Share your expectations in the comments section below.
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