Russia’s central bank reported a worrying trend of cryptocurrencies enabling more financial crimes, with almost every scam it uncovered last year involving digital assets on some level.
In an official statement, the regulator said financial scams rose by 16% year-over-year in 2023. Alarmingly, the central bank detected crypto themes or mechanisms in nearly all cases, from pyramid schemes to investment fraud.
Over 5,700 questionable companies and projects showed signs of illegality, per the report. The central bank took action by blocking over 11,200 websites belonging to alleged scammers and financial schemes. It also initiated over 125 criminal cases and 620 administrative cases against suspicious market actors.
While the bank acknowledged the lifespan of scams was shrinking, limiting potential damage, the predominance of cryptocurrency in enabling illegal behavior is extremely worrying. The central bank blamed the trend on growing numbers of unlawful market participants turning to crypto themes to take advantage of the hype and lure victims.
Joining forces with Russia’s Federal Antimonopoly Service and internet censor Roskomnadzor, the central bank aims to crack down on crypto-tied fraud by investigating chat rooms, gaming sites, bogus exchanges, and more that demonstrate red flags.
Notably, the regulator called out apparent scams promoting Siberian crypto mining operations, a common tactic to get victims to fund fake facilities.
The report underscores the unique risks cryptocurrencies can present by enabling anonymity, instant transactions, digital transfers, and other features criminals regularly exploit. Though crypto and blockchain technology hold meaningful potential, Russia’s rampant crypto-enabled crime wave last year shows why appropriate safeguards and oversight are critical.
With fraud schemes only growing more sophisticated, the central bank and its partners have significant work ahead to deter unlawful behavior and protect consumers in an increasingly digitalized financial system. But robust reporting and enforcement efforts will be crucial to get ahead of the problem before it spirals out of control.
