Bank of Russia Exposes Nearly 150 Financial Pyramid Scams, Fraudsters Exploit Crypto Craze

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The Central Bank of Russia (CBR) has identified 146 financial pyramid schemes in only six months this year. Fraudsters often lure people with weak financial literacy into investment scams linked to cryptocurrencies or crypto mining operations.

Pyramid Schemes Thrive Amid Rising Investment Demand, Bank of Russia Says

The number of financial pyramid scams uncovered by the CBR between January and June 2021 is 1.5 times higher compared to the same time period last year, the regulator announced this week. The financial authority attributed the spike to increased activity of “unfair market participants” in the midst of ongoing economic recovery and increasing demand for investments in Russia.

Bank of Russia also emphasized that fraudsters take advantage of “people’s insufficient financial and digital literacy” convincing them to invest in projects associated with trending topics. Investors often put money into cryptocurrencies, “pseudo cryptocurrencies” or fake crypto mining operations, CBR noted in a press release published Thursday. The bank further detailed:

"Criminals communicate with potential clients in social networks and messengers and carry out aggressive targeted advertising campaigns."

The regulator also revealed that the number of illegal securities market participants, mostly forex dealers, has soared by 70% in comparison with H1, 2020. The Bank of Russia has found 239 such companies this year. The total number of entities bearing characteristics of financial pyramids or suspected of other illicit activities in the financial market has reached 729, or 16.6% more than the first half of last year.

Since June, the Central Bank of the Russian Federation maintains and updates a list of suspicious financial firms to warn potential investors, revealed Valery Lyakh, director of the Department for Countering Misconduct. The CBR official asked Russian citizens to support the bank’s efforts:

"If you have faced a financial fraud, please report this to the Bank of Russia and law enforcement agencies. This information will help combat illegal operations more efficiently."

Lyakh also expressed hope that the recently adopted Russian legislation allowing the pre-trial blocking of fraudulent websites will help to swiftly restrict the activities of such platforms. He believes this would limit the number of victims who get involved in illicit investment schemes in Russia.

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