Russian court examines criminal case against founders of FX pyramid Start-Invest

Maria Nikolova

The founders of Start-Invest deny their guilt and insist that investors’ money was actually traded in the FX market.

A court in the Russian city Cheboksary is examining a criminal case involving the founders of Start-Invest, a now-defunct company that pledged huge returns to investors who pump their money into the FX market.

A report in Russia’s newspaper “Kommersant” says Denis Mineev and Maxim Vaitovich face fraud charges. They allegedly defrauded more than 2,000 investors for a total sum of approximately RUB 1 billion (USD 17.5 million). The firm was operational between 2011 and 2015. The prosecutors claim that the firm never had any capital but used that of its investors, thus operating as a typical pyramid.

The defendants, who are currently under arrest, deny their guilt and insist that investors’ money was actually traded in the FX market.

One of the offices of “Start-Invest”

An archived version of the company’s webpage (startinvest.com), which is inactive now, shows that it promoted investments with artificially high returns. Investors were solicited to pump money into trading systems, managed by the company’s staff, as well as PAMM accounts.

This is not the first time that PAMM accounts, which are quite popular amid Forex traders in Russia, gain ill fame. Back in the days, Alpari has warned Forex Trend (which turned out to be a fraudulent firm, leaving investors without their money) about the unauthorized use of the “PAMM” trade mark and associated terminology.

It is good to see that a Forex scam case reaches the court, offering some justice to defrauded investors. However, as the number of cases when Forex and fraud go hand in hand rises, so does mistrust in the Forex industry in general. This is a particularly acute problem in Russia, where Forex regulation is novel – Vladimir Putin signed the relevant law in December 2014.

Plus, most people are often unaware of the difference between Forex and binary options, Forex and gambling, OTC and on-exchange trading, etc. One recent example was provided by a legal case involving Broker-Garant, a company claiming to provide OTC Forex trading. The police had suspected that the firm is illegally providing gambling services, but could not prove that the confiscated equipment was used for gambling. As a result, the police was ordered to return 70 pieces of computer equipment to the company.

Read this next

Digital Assets

Revolut receives FCA’s go-ahead to launch crypto trading

British fintech and banking firm Revolut has received a regulatory go-ahead to launch its cryptocurrency services in the UK.

Digital Assets

GBTC share is trading at 36% below bitcoin spot price

Grayscale Bitcoin Trust share has widened its discount relative to the underlying cryptocurrency held in the fund, the highest margin ever since its debut in 2013. Digital Currency Group’s flagship GBTC shares traded at a discount of 35.8% to net asset value (NAV) today.

Digital Assets

Crypto lender Nexo investigated by 8 US state regulators

State securities regulators in New York, California, Kentucky, Maryland, Oklahoma, South Carolina, Washington and Vermont are investigating crypto lender Nexo for allegedly failing to register its Earn Interest Product.

Metaverse Gaming NFT

Astar Network’s ad features 329 top brands to support Web3 in Japan

Blockchain innovation hub Astar Network is making strides in promoting the Web3 adoption worldwide. In yet another milestone, the smart contracts platform has run a national newspaper ad in Japan that set a new global record with participation from 329 blue-chip firms.

Digital Assets

Pyth Network welcomes onchain data from crypto market maker Auros

“By sharing our high-frequency trading data with a truly onchain decentralized network, we aim to foster innovation that will lead to better financial solutions for all participants.”

Digital Assets

Tokeny integrates Ownera to boost liquidity of tokenized assets

“The adoption of FinP2P will result in higher liquidity and better access to capital and assets by providing regulated firms with one secure point of connection to multiple digital asset networks across the globe.”

Digital Assets

BingX launches subsidy vouchers to cover user losses in copy trading

“With the introduction of copy trade subsidy vouchers, new users can easily try out trading strategies without incurring losses.”

Digital Assets

Talos expands sales team: Frank van Zegveld, Matt Houston, Hillary Conley

“The extensive leadership and industry expertise of these new hires will enable us to build long-lasting relationships as we continue to build out our global presence in EMEA and beyond.”

Executive Moves

FX and CFD broker Emporium Capital hires industry veteran Robert Woolfe as COO

His past experience within the FX and CFD industry includes top roles at Capital Index, London Capital Group, GKFX, ETX Capital, and IG.  “I’m delighted to be part of the Emporium Capital team and spearheading the brokerages global expansion plans”, he said about the appointment.

<