At a time when Russia is surrounded by Western sanctions, it seems that scams have cranked up their activities. Many Russian scams offer access to crypto assets while claiming to be licensed by foreign authorities to do so. Russia’s central bank reported that the bulk of the financial pyramids in Russia used cryptocurrencies in one way or another.
Amid Western Sanctions, Russian Pyramids Make the Most of Popularity of Crypto
New report working towards countering illegal activities in Russia’s financial market reveals that more than 56% of the pyramid schemes in the country’s Federation during the first half of 2022 raised funds in various cryptocurrencies or advertised crypto investments. A very high number of entities have been involved in such activity.
Russian news agency RBC quoted that the sanctions imposed by the West on Russia because of Russia’s conflict with Ukraine have significantly changed the working conditions for many legal financial institutions within the country and fraudsters seem to have taken advantage of the situation.
While people were looking for other possible investment opportunities, the response to this demand by the Russians came in the form of new financial pyramids. The Central Bank of Russia (CBR), as the monetary authority of the country, explained that these financial pyramids had a short lifespan and were small-scale schemes for the most part.
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, companies, and individual entrepreneurs within the country that showed signs which indicated some illegal financial activity. As mentioned in the report, this figure is about three times more than the numbers from the same months in 2021.
However, crypto is not the only market such entities have been focused on, as more than 670 of them 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 so as to gather funds exclusively in cryptocurrency or foreign fiat currency.
To crack down on such activities, the monetary authority has notified the relevant law enforcement agencies, the Roskomnadzor telecom watchdog, the Federal Tax Service, and domain name registrars. The Central Bank also works regularly to block any suspicious websites and keeps record of a blacklist of entities that are likely to be illegally operating in Russia’s financial sector.
CBR allowing stock exchanges to trade in digital assets
The Central Bank of Russia had previously suggested allowing stock exchanges to trade in digital assets. As the country’s monetary authority, CBR has now already reported an increase in the number of new financial pyramids exploiting the crypto theme for the month of May.
One reason for the growth of financial pyramids has been the financial uncertainty which only heightened interest in schemes around investment opportunities in the digital asset space.
At the same time, the Russian Ministry of Internal Affairs earlier this week proposed that the authorities in Moscow should bring in criminal liability for those who provide money-laundering services to the fraudsters. If the lawmakers are to accept the ministry’s advice, these individuals or organizations who cater to fraudsters, which can also be sometimes unsuspecting individuals who allowed scammers to use their crypto wallets and bank accounts, could get as much as seven years of prison time for their involvement in such illegal activity.