Crypto Scams on the Rise in Russia, Central Bank Warns

The Bank of Russia, the country’s central bank, has issued a warning about the increasing number of financial scams that involve cryptocurrencies. According to the bank, almost all of the illegal schemes it detected in 2023 had some crypto-related elements.

Crypto Themes Used to Lure Investors

The bank claimed that it had identified 5,735 entities, including companies, projects, individual entrepreneurs, and others, that showed signs of illegal activities. Many of them were financial pyramids, which promise high returns to investors but rely on new deposits to pay out old ones.

Scams Become Shorter and Less Damaging

However, the bank also noted that there was a positive trend in the fight against financial fraud. It said that the lifespan of scam projects had become shorter and they were causing less financial damage to victims. The bank attributed this to its efforts to block access to the websites and social media accounts of the scammers, as well as to raise public awareness and cooperation with law enforcement agencies.

The bank said that it had blocked more than 11,200 web pages that belonged to illegal participants in the financial market and the operators of financial pyramids. It also launched more than 125 criminal cases and 620 administrative cases against the suspected scammers. Moreover, the bank said that it was working with the Federal Antimonopoly Service and the national censorship body, Roskomnadzor, to combat financial fraud.

Crypto Mining Scams and TV Series Scams

The bank’s public list of suspected financial scams and pyramids contains several crypto-related examples, such as social media chatrooms, crypto games, bogus exchanges, and crypto trading bot scams. One of the common types of scams is the crypto mining-themed scam, which asks investors to fund fake Siberian Bitcoin mining centers.

Another prominent example of a crypto scam is based on the wildly popular TV series The Boy’s Word: Blood on the Asphalt (also known as Slovo Patsana), which features a young hacker who uses cryptocurrencies to fight corruption and injustice. The scammers use the name and images of the show to attract fans and persuade them to invest in a fake crypto project.

Crypto Regulation in Russia

The Bank of Russia has been one of the most vocal opponents of cryptocurrencies in the country, arguing that they pose risks to financial stability, consumer protection, and anti-money laundering. The bank has also been reluctant to approve any crypto-related activities or products, such as crypto exchanges, funds, or derivatives.

In January 2024, the bank issued a consultation paper on the regulation of digital assets, which proposed to ban or restrict the issuance, circulation, and exchange of cryptocurrencies in Russia. The bank also suggested to limit the access of retail investors to crypto investments and to impose strict reporting and disclosure requirements on crypto service providers.

The bank’s stance has been criticized by some crypto industry players and experts, who claim that it is too harsh and restrictive, and that it could drive away innovation and investment from the country. They also argue that the bank’s measures are ineffective and counterproductive, as they could push crypto users to the underground market and increase the risk of fraud and cybercrime.