According to Bank of Russia, more than half of this year’s financial pyramids in Russia involved cryptocurrency.

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The majority of the financial pyramids discovered in 2022 employed cryptocurrencies in some capacity, according to a recent report from Russia’s central bank. Russian scammers have increased their operations in response to Western sanctions, frequently claiming to have authorization from foreign governments to provide access to cryptocurrency assets.

A report aimed at preventing illegal activities in the country’s financial market reveals that 537 entities, or over 56% of the pyramid schemes in the Russian Federation during the first half of the year, solicited investments in various cryptocurrencies. The Central Bank of Russia published the paper (CBR).

According to the regulator, who was quoted by RBC Crypto, the sanctions put in place by the West because of the conflict in Ukraine have significantly altered the operating environment for legitimate financial institutions in Russia, and fraudsters have benefited from the situation.

New financial pyramids were created in response to the demand for alternative investment opportunities among Russians. The monetary authority clarified that the majority of these were modestly sized schemes with a

Between January and June 2022, the central bank was able to pinpoint more than 2,200 businesses, initiatives, and business owners whose operations displayed indications of illicit financial activity. According to the report, the amount is three times higher than it was during the same time period in 2021.

These entities weren’t just interested in crypto; 671 of them focused on the securities market. The CBR claims that these businesses frequently represent themselves as being approved by a regulatory body in another country and only accept foreign fiat or cryptocurrency as payment.

Bank of Russia has alerted the appropriate law enforcement agencies, Federal Tax Service, Roskomnadzor telecom watchdog, and domain authorities to stop their activities.

The Central Bank of Russia already registered an increase in the number of new financial pyramids exploiting the crypto theme in May. Another reason for their growth has been the financial uncertainty which boosted interest in schemes around investment opportunities in the digital asset space.

Meanwhile, the Russian Ministry of Internal Affairs suggested this week that the authorities in Moscow should introduce criminal liability for those providing money-laundering services to crypto fraudsters. These so-called ‘droppers,’ sometimes unsuspecting individuals who allowed scammers to use their bank accounts and crypto wallets, can get up to seven years of prison time for their involvement if lawmakers accept the ministry’s advice.