Russian police take cryptocurrency fraudsters to court

Maria Nikolova

The three arrested men are accused of illegal banking via an international payment system and a Bitcoin exchange platform.

Russian police have arrested three men accused of generating illegal income through a cryptocurrency scheme. “Officers of the Criminal Investigation Administration of the Russian MIA Administration for the Kostroma Region together with the Russian FSB Administration for the Kostroma Region apprehended three gang members involved in illegal banking through using an international payment system and a bitcoin exchange platform,” said Russia’s MIA official representative Irina Volk.

In order to organize a virtual exchange service, the malefactors had registered over 300 bank cards and SIM cards in their relatives and acquaintances’ names and then conducted cryptocurrency exchange operations and transfers through those cards. According to the investigators, the three men in question had illegally cashed out more than RUB 500 million ($8.65 million) through Internet accounts and profiles registered in dummies’ names.

In the course of the investigation, the police identified and questioned 400 witnesses and carried out nearly 30 expert examinations. During the searches, policemen seized computer media presumably containing information about the malefactors’ illicit activity.

The Investigation Unit of the Investigation Administration of the Russian MIA Administration for the Kostroma Region have charged the defendants with law violations subject to Part 2 Article 172 of the Criminal Code of the Russian Federation. The court has issued a restraining order to the detained men. At the present moment, the materials of the criminal case have been sent to the court for consideration on the merits.

The actions of the Russian police underline a sharp change of attitude towards Bitcoin and its likes by Russian authorities. Yesterday, the Bank of Russia, which had been warming up to crypto currencies and had even indicated its interest in launching a national virtual currency, issued a stark message with regard to crypto currencies. The announcement, which reiterated a warning the central bank issued back in 2014, said that the risks associated with the use of crypto currencies are too high. The “Megaregulator” said it was premature to allow any crypto currencies along with any financial instruments linked to crypto currencies to the exchanges and regulated markets or the payment structures of the Russian Federation.

In May this year, Marat Safiulin, who heads the Federal Public-State Foundation for the Protection of Investor and Shareholder Rights, quoted estimates showing that every 48 hours, a new financial pyramid emerges in Russia. Fraudulent schemes involving crypto currencies are of particular concern for the expert who forecast that these will spread further in the future. Most of them operate as “hyip” businesses promising artificially high returns, he noted back then.

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