A new financial pyramid emerges in Russia every 48 hours
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.