Central Bank flags a new type of gaming financial pyramid that raises funds through cryptocurrencies

The Russian central bank has recorded the spread of a new type of financial pyramid schemes masquerading as online investment games, which also attract funds via cryptocurrencies. This was stated by Valery Lyakh, head of the Central Bank’s Department for Combating Improper Practices, cited by РБК.

Such schemes accounted for 8% of the total number of financial pyramids identified by the regulator in the third quarter of 2021.

According to Lyakh, the hallmark of these pyramids is attracting citizens with the prospect of easy earnings in a gaming format. Typically, to receive a reward or prize, the user must recruit new players into the project.

“If there are no new players, the project stops and folds. And you can’t withdraw the money; by that time it’s already been withdrawn for you,” Lyakh said.

Funds to participate in the project are transferred through the site’s personal account by various methods, including cryptocurrencies.

Lawyers say the Central Bank may see risks of financial pyramids in some NFT games as well.

In total, during the first nine months of 2021, the regulator identified 424 financial pyramids, of which 278 were detected in the third quarter.

The majority of pyramids raise funds through digital assets or by presenting themselves as investments in them, Lyakh noted. He said many such projects promise substantial profits in a short period.

The head of the Central Bank’s department described it as a classic tale of financial fraud marketed as investments in the stock or cryptocurrency markets.

Earlier in July, Lyakh said that criminals often offer residents of the Russian Federation to invest in ‘pseudo-cryptocurrencies’.

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