Bank of Russia unearths 150 Financial Pyramid Scams

• Pyramid Schemes thrive in an atmosphere of increasing investment demand
• Scams between January and June 2021 is 1.5 times higher as compared to last year
• Demand for investments in Russia exploited by unfair market participants

Cryptocurrency, with its decentralized structure and anonymity, makes it a perfect tool for fraudsters to entice people with poor financial literacy into investment scams linked to cryptocurrencies or crypto mining operations. The Central Bank of Russia has identified 146 financial pyramid schemes in only six months this year. The Pyramid Schemes thrive in an atmosphere of increasing investment demand, said the Bank of Russia. 

The Central Bank of Russia has uncovered numerous financial pyramid scams between January and June 2021. It is 1.5 times higher as compared to the same period in 2020. It was announced by the regulator this week. The ongoing economic recovery and increasing demand for investments in Russia make it an ideal setting for unfair market participants, and this, according to financial authorities, has caused a spike in such activities.

Fraudsters take advantage of insufficient knowledge about financial and digital processes.

Bank of Russia said that fraudsters take advantage of the lack of knowledge about financial and digital processes and easily hoodwink them into projects associated with trending topics. As a result, investors often put their money into cryptocurrencies, pseudo cryptocurrencies, or fake crypto mining operations, the Central Bank of Russia noted.

Fraudsters search for potential victims on social networks and messengers.

The Bank further added that fraudsters communicate or search for potential victims on social networks and messengers and carry out aggressive targeted advertising campaigns. 

The regulator further added that the number of illegal securities market players, which includes mostly forex dealers, has soared by 70% compared to the same period last year. In addition, suspected entities bearing characteristics of financial pyramids or illegal securities market participants or other illicit activities in the financial market have reached 729 or 16.6% more than the first half of last year.

Central Bank of Russia appeals to its citizens

The Central Bank of the Russian Federation maintains and updates a list of suspicious financial firms to warn potential investors. It was revealed by Valery Lyakh, director of the Department for Countering Misconduct. As a result, the Central Bank of Russia has asked its citizens to help the Bank weeding out such elements within the Russian financial ecosystem.

Ritika Sharma

With a background in journalism, Ritika Sharma has worked with many reputed media firms focusing on general news such as politics and crime. She joined The Coin Republic as a reporter for crypto, and found a great passion for cryptocurrency, Web3, NFTs and other digital assets. She spends a lot of time researching and delving deeper into these concepts around the clock, and is a strong advocate for women in STEM.