According to the Bank of Russia, there were more than 5,700 pyramid schemes and illicit lenders in Russia in 2023—a 15.5% rise over the number that was discovered in 2022. In particular, a 46% rise was observed in the quantity of pyramid schemes that were found to be using the Internet and cryptocurrencies as promotional and operational instruments.
Russia’s Bank Reports an Increase in Financial Pyramids
A study on the rise in unlawful lenders and pyramid scheme operators was released by the Bank of Russia. An increase of 15.5% over 2022 was observed in the almost 5,700 cases of these attempts that were found. If we limit our attention to pyramid scams alone, the percentage rises to 46%.
The bank stated that the majority of these bad actors used social media and instant messaging apps to promote their activities, leveraging well-known influencers. This could explain why there is a rise in the number of fraudulent and illegal financial providers, as these platforms are used to reach consumers.
The research also discovered that bitcoin now plays a significant role in these pyramids’ internal operations. While every other pyramid scam in 2022 included cryptocurrencies in one way or another, according to the Bank of Russia, practically all of the schemes this year offered investments in internal tokens or received donations in cryptocurrency. The fact that 1,500 fake initiatives used cryptocurrency contributions allows the perpetrators of these frauds to remain somewhat anonymous while still collecting their benefits.
The bank has blocked access to more than 11,200 resources related to pyramid schemes and opened over 125 criminal charges in an effort to stop this.
A financial regulatory framework addressing these assets and their application is necessary, as demonstrated by the emergence of bitcoin pyramid schemes in Russia. Director of Rosfinmonitoring Yuri Chikhanchin demanded full crypto regulation in November, arguing that cryptocurrency is one of the instruments used by the nation’s criminals to replace cash. Making a decision as soon as possible is preferable. The game’s rules must be understood by us,” he said.
What are your thoughts on the surge in Russian pyramid schemes? Tell us in this space provided for comments.