The latest report from the Bank of Russia brings to light a troubling uptick in financial scams intertwined with cryptocurrency in 2023. The number of entities involved in illicit activities, such as financial pyramids, reportedly spiked by 15.5% compared to the previous year, with a total of 5,735 identified cases.
Rise of Online Scams in the Crypto Sphere
The report sheds light on a concerning trend where bad actors in the financial market are leveraging cryptocurrencies. In 2022, every other fraudulent investment scheme involved crypto, and by 2023, the bank asserts that nearly all financial pyramids and illegal brokers were either offering investments in local tokens or accepting crypto contributions.
These scams primarily operate as “small pseudo-investment projects” conducted online. They leverage social networks and platforms like Telegram, often enlisting “influential lifestyle bloggers” for promotional purposes.
Furthermore, foreign payment services and cryptocurrencies emerged as the preferred channels for funneling funds to these fraudulent schemes.
The report reveals that over 45% of identified scams encouraged investors to use foreign payment services, while nearly 1,500 fraudulent projects accepted crypto contributions, enabling organizers and beneficiaries to remain anonymous.
Crackdown on Illicit Financial Activities
To combat the proliferation of these illegal operations, the Bank of Russia has initiated measures to block access to domains and subdomains used by entities involved in illicit financial activities.
According to the central bank, fraudsters frequently create duplicate resources after their main sites are shut down. In 2023, more than 1,500 financial pyramids had their domains and subdomains blocked using this method.
Additionally, the report highlights a decline in property-secured loan providers, signaling a downward trajectory in this sector. The regulator also identified 820 illicit forex dealers and 42 illegal brokers and managers.
To tackle these illicit practices, the Bank of Russia recommends that credit institutions enforce anti-money laundering legislation on entities engaged in illegal financial activities.
These efforts are aimed at curbing the lifespan of financial pyramids, hindering fundraising by illegal financial service providers, and minimizing the harm inflicted on citizens by such schemes.
To bolster its initiatives, the central bank shares information about identified illicit participants and financial pyramids with law enforcement agencies and regulatory bodies.
As of 2023, the Bank of Russia’s actions have resulted in the initiation of over 125 criminal cases, more than 620 administrative cases, and the implementation of over 1,300 other response measures. Moreover, access to over 11,200 online resources belonging to illicit participants and financial pyramids has been restricted.
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Disclaimer: The information provided in this article is for informational purposes only and should not be construed as financial or investment advice. Cryptocurrency investments are subject to market risks, and individuals should seek professional advice before making any investment decisions.
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