Bank of Russia Detected Over 5,700 Pyramid Schemes in 2023

The Bank of Russia reported that the number of pyramid schemes and illegal lending providers in Russia rose to over 5,700 in 2023, an increase of 15.5% over the number detected in 2022. Specifically, the number of pyramid schemes detected increased by 46%, relying on the Internet and cryptocurrency as tools for promoting and carrying out their operations.

Bank of Russia Reports Financial Pyramids Increase

The Bank of Russia issued a report on the increase of illegal lending providers and pyramid scheme numbers. Over 5,700 instances of these endeavors were detected, representing an increase of 15.5% compared to 2022. Also, focusing only on pyramid schemes, the number grows to 46%.

This increase in the number of illegal and fraudulent financial providers is related to the use of the Internet and social media as tools to reach consumers, as the bank declared that the majority of these bad actors used instant messaging apps and social media to promote their activities, leveraging known influencers.

Also, the report found that cryptocurrency has taken a relevant place in the inner workings of these pyramids. The Bank of Russia reported that while in 2022, every other pyramid scheme involved crypto in some form, almost every scheme offered investment in internal tokens or accepted donations in cryptocurrency last year. 1,500 fraudulent projects accepted contributions in cryptocurrency, which helps the actors behind these schemes obtain their rewards while maintaining some degree of anonymity.

To curb this, the bank has taken several measures, including opening over 125 criminal cases against these initiatives and blocking access to over 11,200 pyramid-related resources.

The rise of cryptocurrency pyramid schemes in Russia underscores the need for a financial regulatory framework addressing these assets and their utilization. In November, Director of Rosfinmonitoring Yuri Chikhanchin called for comprehensive crypto regulation, given that, in his view, crypto is part of the tools used by criminals in the country, who leverage it as a substitute for cash. “The sooner a decision is made, the better. We need to understand the rules of the game,” he explained.

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