Cryptocurrencies Used in Surging Financial Frauds, Says Russian Central Bank

Moscow, Tuesday, February 20, 2024 – Cryptocurrencies had been increasingly used in pyramid scams, the Central Bank of Russia said in a media release on Friday, February 9. ¹

It said that the bank had detected a significant rise in financial pyramid schemes and illegal activities involving crypto themes in 2023.

The Bank of Russia’s data, released on February 9, 2024, also reveals a stark shift in financial fraud tactics.

While overall detections of suspicious entities increased by 15.5% to 5,735, cryptocurrency’s presence in these schemes soared dramatically.

It said that in 2022, half of pseudo-investment projects used cryptocurrency themes.

“By 2023, virtually all pyramid schemes and illegal brokers offered internal token investments or accepted cryptocurrency contributions,” it said.

The Bank of Russia said that it had enhanced its monitoring system, employing automated content analysis, which proved effective in identifying online activities tied to financial fraud.

However, it said that the majority of these operations, including pyramid schemes, illegal lenders, and even pseudo-brokers, primarily function online, leveraging social media platforms and instant messaging apps to reach potential victims.

This aligns with the observed trend of consumers increasingly relying on remote access to financial services and trusting information obtained from social media.

While pyramid schemes represent a major concern, the data also reveals an increase in illegal lending practices and a worrying decrease in illegal activity within the securities market.

Sources