The Central Bank of Russia (CBR) has identified 146 financial pyramid schemes in only six months this year. Fraudsters often lure people with weak financial literacy into investment scams linked to cryptocurrencies or crypto mining operations.
Pyramid Schemes Thrive Amid Rising Investment Demand, Bank of Russia Says
The number of financial pyramid scams uncovered by the CBR between January and June 2021 is 1.5 times higher compared to the same time period last year, the regulator announced this week. The financial authority attributed the spike to increased activity of “unfair market participants” in the midst of ongoing economic recovery and increasing demand for investments in Russia.
Bank of Russia also emphasized that fraudsters take advantage of “people’s insufficient financial and digital literacy” convincing them to invest in projects associated with trending topics. Investors often put money into cryptocurrencies, “pseudo cryptocurrencies” or fake crypto mining operations, CBR noted in a press release published Thursday. The bank further detailed:
Criminals communicate with potential clients in social networks and messengers and carry out aggressive targeted advertising campaigns.
The regulator also revealed that the number of illegal securities market participants, mostly forex dealers, has soared by 70% in comparison with H1, 2020. The Bank of Russia has found 239 such companies this year. The total number of entities bearing characteristics of financial pyramids or suspected of other illicit activities in the financial market has reached 729, or 16.6% more than the first half of last year.