Russia’s pyramid scheme grossed over $ 1.5 billion in bitcoin across Eastern Europe, according to Chainalysis

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The bitcoin volume of one of the cryptocurrency industry’s most infamous pyramid schemes could be significantly larger than initial estimates.

On September 1, blockchain analytics firm Chainalysis released a report on cryptocurrency-related crime in Eastern Europe.

The region is historically crypto-active. It has seen an increase in the illicit use of cryptocurrencies over the past year, largely linked to the Finiko pyramid scheme. Chainalysis found that “between December 2019 and August 2021, Finiko received over $ 1.5 billion worth of Bitcoin in over 800,000 separate deposits.”

Earlier reports had valued Finiko’s consumption at nearly $ 95 million. If the $ 1.5 billion figure is true, it would make Finiko one of the biggest crypto scams in history. Most consider OneCoin, which raised around $ 4 billion before its founder, the current record holder, passed away.

Pyramid schemes primarily involve the use of recruiting tactics to get more investors to participate. Essentially, existing stakeholders are rewarded for making more money.

The financial pyramid has been particularly active in Russia and Ukraine. Affected by failing financial systems, currency devaluation and limited investment opportunities, many Russians and Ukrainians are particularly vulnerable to scams like Finiko.

Regulators reportedly began to take a closer look at Finiko in late 2020, and the investment program eventually drew a warning from the Bank of Russia, which said it was showing “signs of a ‘pyramid scheme'” in a February notice.

Authorities in Kazan arrested the program’s founder, Kirill Doronin, at the end of July, confiscating Russian and Turkish passports, including a Doronin acquired a few weeks earlier under the name Onur Namik. He should be released at the end of September.

Doronin has reportedly offered information about his co-founders Zygmunt Zygmuntovich and Marat and Edvard Sabirovy, but claims not to know where they are.

Finiko’s main telegram was active until July 21, announcing Doronin’s new “project”, OmFin. Finiko’s help account remains active. Doronin himself had, in the past, managed a popular Instagram account, but went almost four years without posting before posting an image of Bitcoin.

Meanwhile, Doronin’s supporters are popping up on social media. A petition to shorten his sentence is also circulating.

Other trends in Eastern Europe

Chainalysis found that while Western Europe remains a larger area for crypto use, Eastern Europe has overtaken the west in terms of deposits sent to scams, although more than half of this figure comes from Finiko himself.

At the country level, Ukraine recorded the highest number of visits to cryptocurrency scam sites in the world, more than double the next country on the list, namely the United States.

Eastern Europe has also seen the most crypto go to darknet markets, with Hydra Market leading the pack.

2021 The Block Crypto, Inc. All rights reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial or other advice.

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