Cryptocurrency News, Cryptocurrency Regulation

Bank Of Russia Discloses Most Financial Pyramids Involve Crypto

According to a new report from the Russian central bank, most of the financial pyramids that had been identified in the country in 2022 so far involved the use of cryptocurrencies in one way or the other. As the use of crypto has intensified in the Russian Federation because of the sanctions imposed by Western nations, this has given scammers the opportunity to step up. They offer access to these digital assets and claim to have a license from foreign regulatory authorities.

Sanctions pave way for scams

The Central Bank of Russia (CBR) published a paper, which is dedicated to dealing with the illegal activities that are taking place in the financial markets of the country. The report found that more than 56% of the pyramid schemes that occurred in the first half of this year were either advertising crypto investments, or were raising funds for different cryptocurrencies. There were a total of 537 entities engaged in these activities.

The regulator said that the sanctions that were imposed against the Russian Federation by Western nations because of its conflict with Ukraine had dramatically changed the way how legal financial institutions operate in the country. This appears to have benefitted fraudsters. Due to the sanctions, people in Russia were seeking alternative investment opportunities.

This demand resulted in the launch of a number of financial pyramids in the market. According to the monetary authority of Russia, most of these pyramid schemes were on a small scale and did not last for long.

Staggering numbers

The Russian central bank said that between January and June of this year, it had managed to identify a staggering number of these financial pyramids. There were more than 2,000 projects, companies, and individual entrepreneurs who were running operations that exhibited signs of illegal financial activities.

According to the report from the CBR, this number is three times higher as compared to the same period last year. It should be noted that crypto is not the only market that these fraudsters were interested in, as there were 671 of them that also focused on the securities market.

The CBR disclosed that these companies portray themselves as licensed ones, with authorization from a regulatory authority of a different region. They then ask for funds in crypto or foreign fiat currency.

Curbing the activities

In order to curb these illegal activities, the Central Bank of Russia (CBR) said that they had updated the relevant law enforcement agencies about them. These include the domain name registrars, the telecom watchdog Roskomnadzor, and the Federal Tax Service.

The Bank of Russia is also taking steps for blocking suspicious websites and has also maintained a list of blacklisted entities that are running their operations illegally in the financial sector of the country. The number of pyramid schemes that make use of crypto in one way or the other has also increased in the month of May. The financial uncertainty in the country has also given these schemes a boost, as more people are interested in these investment opportunities.

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