A new financial pyramid emerges in Russia every 48 hours

Maria Nikolova

The activity of crypto-currency fraud schemes is on the rise in Russia, which prompts calls for oversight of the segment.

Earlier this year, the Bank of Russia data showed that the losses from financial fraud have decreased in 2016, compared to 2015, but the number of financial pyramids remains high. The latest assessment of the activities of such fraudulent schemes adds to concerns.

Marat Safiulin, who heads the Federal Public-State Foundation for the Protection of Investor and Shareholder Rights, estimates that every 48 hours, a new financial pyramid emerges in Russia. Mr Safiulin was quoted by Banki.ru. He noted that the average life of a financial pyramid does not exceed three months. Usually after such a period of time, some key targets are reached and the fraudsters set up another entity in another Russian region.

Fraudulent schemes involving crypto-currencies are of particular concern for the expert who forecasts that they will spread further in the future. Most of them operate as “hype” businesses promising artificially high returns, he says.

Given that crypto-currencies are not regulated in Russia, in the face of calls to do so, Mr Safiulin highlights improving financial literacy as the best way to counteract the rise of financial scams.

Russia is warming up to the legalization of blockchain technologies, and even the prime minister has urged for considering the steps to regulate this technology. However, any legalization of Bitcoin and other crypto-currencies does not seem close. Early in April this year, Deputy Finance Minister Alexey Moiseev said Russia was looking to recognize crypto-currencies as legal in 2018, but shortly after that Maxim Grigoriev, Chief of the Centre for Financial Technologies at the Bank of Russia, noted that it was too early to talk of legalization of crypto-currencies in Russia.

Another type of fraudulent activity that is on the rise in Russia involves binary options. Russia accounted for 29% of the visits of four of the biggest binary options websites in April this year, according to Forbes. Russians are losing tens of millions of dollars to binary options fraud every year. Lack of proper regulation is one of the factors for the proliferation of such scams.

Read this next

Digital Assets

Crypto trading volume spikes at Swiss bourse amid FTX collapse

The shockwaves from the historic collapse of Sam Bankman-Fried’s crypto empire are still being felt across the industry, but some trading venues are actually doing better because of it.

Executive Moves

CMC Markets adds Camilla Boldracchi to institutional sales

UK’s biggest spread better, CMC Markets has promoted Camilla Boldracchi to take on an expanded role within its institutional sales desk.

Institutional FX

FXSpotStream reports $1.48 trillion in monthly volume for November

FXSpotStream’s trading venue, the aggregator service of LiquidityMatch LLC, reported its operational metrics for November 2022, which moved higher on a yearly basis but reflected weak performance across executed trade volumes when weighed against the figures of the prior month.

Retail FX

Interactive Brokers’ client activity drops 30% YoY

Interactive Brokers LLC (NASDAQ:IBKR) saw 1.95 million daily average revenue trades, or DARTS, in November 2022 compared to 1.96 million transactions in the prior month.

Digital Assets

The rise of Crypto ETPs in traditional exchanges as crypto winter deepens

Institutional investors are increasingly looking at traditional regulated exchanges as their first route into digital assets amid market turmoil caused by the crypto winter and the collapse of several big names within the space, including FTX. Acuiti and Eurex surveyed 191 buy and sell-side firms on their views of the digital assets markets in order […]

Digital Assets

TP ICAP’s crypto arm receives FCA’s go-ahead

UK interdealer broker TP ICAP has received a regulatory go-ahead to launch its cryptocurrency services in the UK. The bid shows that the recent collapse of FTX exchange has done little to damp the interest of big names in running their own crypto business.

Industry News

Coin Signals founder to pay $2,847,743 after prison sentence over crypto Ponzi scam

The U. S. District Court for the Southern District of New York has ordered Jeremy Spence, founder of Coin Signals, to pay $2,847,743 in restitution to victims of a fraudulent virtual currency scheme.

Digital Assets

CME Group goes DeFi: Reference rates and real-time indices of Aave, Curve, Synthetix

“These rates are designed to provide traders, institutions and other users transparency and price discovery across a much broader range of tokens, allowing them to confidently and more accurately value cryptocurrency sector specific portfolios and manage price risk around various blockchain-based projects.”

Digital Assets

BingX publishes Proof-of-Reserve report by auditor Mazars to address general distrust in crypto

“It is our responsibility to help our customers know their platform and feel safe. They should only trade in regulated and licensed exchanges or one showing them proof when they need it.”