At a time when Russia is surrounded by Western sanctions, it seems that the scams have intensified their activities. Many Russian scams offer access to crypto assets while claiming to be authorized by foreign authorities to do so. The Central Bank of Russia reported that the bulk of the financial pyramids in Russia use cryptocurrencies in one way or another.
Amid Western Sanctions, Russian Pyramids Are Making the Most of Crypto’s Popularity
A new report working to combat illegal activities in the Russian financial market reveals that more than 56% of the country’s Federation pyramid schemes in the first half of 2022 raised funds in various cryptocurrencies or announced crypto investments . A very large number of entities have been involved in such activities.
The Russian news agency RBC quoted that the sanctions imposed by the West on Russia due to the conflict between Russia and Ukraine have significantly changed the working conditions of many legal financial institutions in the country and that fraudsters seem taking advantage of the situation.
As people searched for other possible investment opportunities, the answer to this demand from the Russians came in the form of new financial pyramids. The Central Bank of Russia (CBR), as the country’s monetary authority, explained that these financial pyramids have a short lifespan and are mostly small-scale projects.
Between the months of January 2022 and June 2022, the monetary authority was able to find a surprisingly high number of such scams. There were more than 2,200 projects, businesses and individual entrepreneurs in the country that showed signs of illegal financial activity. As mentioned in the report, this figure is about three times higher than the figures for the same months in 2021.
However, crypto is not the only market these entities have focused on, as more than 670 of them have also targeted the securities market. According to the Central Bank of Russia, these projects or companies often claimed to be authorized by a regulatory body in a different jurisdiction in order to raise funds exclusively in cryptocurrency or foreign fiat currency.
To suppress such activities, the monetary authority notified law enforcement agencies, the Roskomnadzor telecommunications watchdog, the Federal Tax Service and domain name registrars. The Central Bank also works regularly to block all suspicious websites and maintains a blacklist of entities that may be operating illegally in the Russian financial sector.
CBR allowing exchanges to trade digital assets
The Central Bank of Russia previously suggested allowing exchanges to trade digital assets. As the country’s monetary authority, CBR has already reported an increase in the number of new crypto-themed financial pyramids for the month of May.
One of the reasons for the growth of financial pyramids has been financial uncertainty which has only increased interest in patterns around investment opportunities in the digital asset space.
Meanwhile, the Russian Interior Ministry proposed earlier this week that authorities in Moscow hold criminally responsible those who provide money laundering services to fraudsters. If lawmakers accept the department’s advice, those people or organizations dealing with fraudsters, who may also be sometimes unsuspecting individuals who allowed scammers to use their crypto wallets and bank accounts, could get up to seven years in prison for their involvement in such illegal activity.