Financial pyramids

2024: Bank of Russia talks about first financial pyramid in CFA market

In September 2024, the Bank of Russia announced an attempt to place the first asset with signs of a financial pyramid in the digital financial asset market (CFA). Deputy Chairman of the Bank of Russia Philip Gabunia said that due to a coincidence, this asset did not go into circulation, which prevented possible negative consequences. This happened on one of the leading platforms specializing in the placement of digital assets. Read more here.

2023

The number of financial pyramids in Russia for the year increased 1.5 times to 2944

According to the results of 2023, the Bank of Russia identified 2944 financial pyramids, which is one and a half times more in comparison with 2022. The regulator published such data in February 2024.

As noted in the Central Bank, most often such pyramids are pseudo-investment online projects, information about which is published on Telegram and other social networks. Basically, financial pyramids attract funds in cryptocurrency (almost half of the pyramids urged "investors" to transfer funds to them in this way in 2023), as well as through foreign payment services (more than 45% accepted payment in this way). The Central Bank notes that the use of cryptocurrencies allows the organizers of the pyramids to remain anonymous.

source = CBR

According to the materials of the Central Bank of the Russian Federation, in 2023 the number of illegal financial schemes, including pyramids, pseudo-brokers and illegal creditors, increased by 15.5% - to 5735 organizations. At the same time, the number of pyramids and pseudo-brokers that attracted cryptocurrencies increased sharply. If in 2022 cryptocurrency was attracted in half of such projects, then in 2023 it appeared in almost each of them.

At the initiative of the regulator in 2023, access to more than 11.2 thousand Internet resources of illegal immigrants was limited, including over 3 thousand pages, channels and chat bots in social networks and Telegram were blocked. The Central Bank sends information about the identified illegal participants in the financial market and financial pyramids to suppress their activities to law enforcement agencies, FAS and Roskomnadzor. In 2023, more than 125 cases under criminal articles were initiated on these requests, as well as more than 620 administrative cases under various articles of the Administrative Code of the Russian Federation (including about 460 cases under the article for illegal professional activities to provide consumer loans).^[1]

Central Bank of the Russian Federation: Every fifth financial pyramid disguises itself as online games

In July 2023, the Bank of Russia warned of an increase in financial pyramids under the guise of online games. The regulator explained that we are talking about illegal projects that lure users with the possibility of quick and easy earnings inside the game - "pay and win." A distinctive feature of such games is the lack of a competitive element, their share in the total number of financial pyramids reached 22%.

According to the Central Bank, most pyramids are small anonymous projects with a short duration and an insignificant amount of participation. Their organizers target offers taking into account the age and preferences of potential participants, and use social networks and instant messengers to promote. As explained in the regulator, the increase in financial pyramids-games is associated with the current economic situation and the interest of the population in additional earnings. Scammers decided to take advantage of this.

The Central Bank of the Russian Federation warned about the growth of financial pyramids under the guise of online games

As July 2023, about 100 varieties of such games are known, said Grigory Osipov, director of investigations at the SHARD cryptocurrency asset security service.

Users are lured by the quick opportunity to make money by taking part in a computer game - a business simulator. These are, for example, projects such as Golden Mines, Rich Birds, Plants vs Zombies Mining Farm and others. The creators of such applications assure that with investments in 2-5 thousand rubles and the proper skills of a strategist, you can develop your gaming business and get real money with the ability to withdraw them, "he explained.

According to Osipov, the damage from economic online games is difficult to assess, since the funds are placed in different payment systems and cryptocurrency. But it can reach $5 million. Partner of the law firm Milton Legal Sergey Shakirov estimated losses at $6 million.^[2]

The number of financial pyramids in Russia increased by 19%. 60% of them accept "contributions" in cryptocurrency

The Bank of Russia for January-June 2023 revealed 1139 financial pyramids against 954 in the same period of 2022 (an increase of 19%). The regulator published such data on July 17, 2023.

According to statistics from the Central Bank, in the second quarter of 2023, the number of financial pyramids increased 1.7 times compared to the previous three months. The main growth fell on short-term pseudo-investment Internet projects, including in social networks and instant messengers. The organizers most often received funds from customers in the form of cryptocurrencies and through foreign payment services. The number of pyramids that accepted contributions in cryptocurrencies increased (58% of the total, 658 entities).

The Bank of Russia for January-June 2023 revealed 1139 financial pyramids

In a number of cases, potential customers are warned in advance that the project is a pyramid. The trend towards gamification of financial pyramids remains: more than 22% of illegal projects operated in the form of economic games.

To suppress illegal activities in the financial market, the Central Bank sends information about all identified facts to authorized bodies and organizations - law enforcement agencies and the FAS. In the first half of 2023, including based on the results of consideration of materials sent by the regulator (including previous periods), the following measures were taken:

• about 70 cases were initiated under criminal articles;
• more than 300 administrative cases were initiated under various articles of the Administrative Code of the Russian Federation (including more than 200 cases under the article for illegal professional activities to provide consumer loans);
• more than 600 other response measures have been taken;
• shared or restricted access to more than 5,000 Internet resources that belonged to illegal financial market participants and financial pyramids.^[3]

2022

The number of financial pyramids in Russia increased by 85%

In 2022, the Bank of Russia identified 2017 financial pyramids, which is 2.3 times more than a year earlier (then 871 pyramids were registered). Almost half of them accepted payments in cryptocurrencies, a little less used foreign payment services. More than a third of the pyramids acted in the form of economic games, the regulator said in a report.

The Central Bank noted that almost all pyramids and illegal professional participants, as well as 43% of "black" creditors attracted citizens online. At the same time, more and more often the organizers of illegal schemes do not create their own sites, but develop activity exclusively in instant messengers.

Almost a thousand organizations (48%) with signs of a financial pyramid accepted payments in cryptocurrencies. At the same time, there were fewer projects that offered investments in cryptocurrency assets or issued their own pseudo-crypto currency. About 46% of the identified pyramids accepted funds from customers using foreign payment services. Over 30% of the pyramids acted in the form of economic games.

According to the Central Bank, in 2022 the number of small anonymous projects with a short life and an insignificant amount of participation increased. A number of the identified pyramids operated without their own website and exclusively in the Telegram messenger, while funds were raised on debit cards of dummy persons. Special Internet resources are also identified that sell turnkey ready-made hype project sites.

In 2022, in addition to financial pyramids, illegal creditors and professional participants in the securities market, the Bank of Russia began adding illegal operators of investment platforms and illegal participants in the insurance market to the List of companies with identified signs of illegal activities in the financial market.

The Central Bank also noted that the Russians in 2022 gave an average of 50-100 thousand rubles to fraudsters.^[4]

The creators of the financial pyramid MedPharm will go to the colony

The creators of the financial pyramid "MedPharm," who collected money from Russians under the guise of investing in medicine, will go to the colony. This was announced in early November 2022 by the joint press service of the judicial system of the Tyumen region. Read more here.

Russians lose 10-15 billion rubles a year due to financial pyramids - Central Bank

Russians lose 10-15 billion rubles a year due to financial pyramids, the Bank of Russia said in July 2022.

For six months, the Central Bank revealed 954 financial pyramids, which is 6.5 times more than a year earlier. In particular, the number of so-called hype projects (fraudulent projects on the Internet, which are similar to a collective investment fund), which worked exclusively in Telegram with the help of bots, has sharply increased.

2021

Financial pyramids in Russia have become 4 times more - 871

According to the results of 2021, there were 4 times more financial pyramids in Russia - by the end of December there were 871 against 222 against the same period in 2020. Such data were published by the Central Bank of the Russian Federation on February 16, 2022.

According to the regulator, attackers involve people in their schemes, playing on the increased interest of citizens in the financial market - almost all of them promised potential victims help in investing. At the same time, more than 80% of financial pyramids in 2021 operated on the Internet. Their organizers often attracted popular bloggers, including regional ones, to distribute advertising, used the names and brands of the largest Russian and foreign firms as bait.

Financial pyramids in Russia have become 4 times more - 871

More than half (52.8%) of such projects attracted funds in cryptocurrency or advertised investments in various non-existent cryptocurrency assets. Often, fraudsters, taking advantage of insufficient digital and financial literacy of consumers, offered them participation in the production of crypto coins, mining using mobile phones. The number of financial pyramids operating under the guise of online games has increased.

According to the Central Bank report, in 2021, financial pyramids are represented by 699 Internet projects, 69 limited liability companies, 59 consumer cooperatives, 16 joint-stock companies and 28 in other forms.

The Central Bank considers the absence of a license, the promise of guaranteed high profitability, preliminary contributions as a condition for investing funds and more as signs of a financial pyramid. In the list of companies with signs of illegal work by mid-February 2022, there are more than 4100 market participants. In 2021, the Central Bank discovered 2679 illegal financial companies and pyramids against 1549 a year earlier.^[5]

Anastasia Volochkova invested in the QBF financial pyramid and lost millions

In November 2021, the famous ballerina Anastasia Volochkova turned to the police in a fraud case involving the QBF financial pyramid. Read more here.

Central Bank began to identify a new type of "game" financial pyramids

At the end of October 2021, the Central Bank of the Russian Federation announced the identification of a new type of financial pyramids. The organizers of such schemes attract citizens with the possibility of easy earnings and their simplicity, game form.

As RBC writes with reference to the head of the department for countering unfair practices of the Central Bank of the Russian Federation Valery Lyakh, the user is offered to register in a project where you can buy a character or virtual real estate that should bring income. But to get a win, you need to bring new players to the project. The principle of such games is network marketing, as in financial pyramids.

If there are no new players, the project stops, collapses. And the money cannot be withdrawn, they were already taken out for you by that time, "Lyakh explained.

Central Bank began to identify a new type of "game" financial pyramids

He stressed that such pyramids are dangerous, "because here both the younger generation and children can suffer." Money to participate in the project is transferred through a personal account on the site in various ways, including cryptocurrencies. Companies in user agreements on the site indicate that there are no guarantees of a refund, but, as usual, this is written in small letters far below, added the head of the Department of the Central Bank of the Russian Federation.

In the wake of interest in digital assets, primarily for, NFT that is, non-replaceable cryptographic tokens, a huge number of new, including gaming, platforms appear, which the Central Bank regards as financial pyramids, says Pavel Ikkert, managing partner of Ikkert & Partners law firm. Many, although not all, really are, he adds.

State Duma deputy Oleg Savchenko noted that, as a rule, fraudsters are always one step ahead of technology, and the task of the state, special services and legislation is to prevent such crimes. The parliamentarian believes that legislation in the field of Internet games needs to be improved, since it is teenagers who are the most vulnerable target of such fraudulent schemes.^[6]

Central Bank of the Russian Federation: Russians give financial pyramids from 50 thousand to 100 thousand rubles

On October 20, 2021, the Central Bank of the Russian Federation named the amounts that Russians give to financial pyramids - from 50 thousand to 100 thousand rubles. According to Valery Lyakh, director of the department for countering unfair practices of the Bank of Russia, "this is the average check," but there are cases when fraudsters spend 50-100 million rubles.

Lyakh also said that in large scams in terms of building financial pyramids, the average losses of Russians can be significantly higher and range from 300 thousand to 800 thousand rubles.

The mass who come to try is up to 100 thousand rubles. Those who seriously believe are already 300-800 thousand, - he added.

Russians give financial pyramids from 50 thousand to 100 thousand rubles

According to the representative of the Central Bank, there are people who have lost tens of millions of rubles, and often the organizers of financial pyramids work with them individually. At the same time, those who have lost large sums rarely turn to law enforcement agencies, he said.

Lyakh called the subsequent disbelief of the victims in the "normal stock market, normal financial market" the main problem of such spending. It was this danger that forced the regulator to start publishing lists of companies that have signs of fraudulent activity. These may not necessarily be financial pyramids, we can also talk about illegal Forex activities, he stressed.

In early June 2021, the Central Bank of the Russian Federation published a black list of companies that were convicted of illegal activities in the financial market. At that time, it included 1.8 thousand organizations. There are now 2,928 companies on this list.

In addition to financial pyramids, this list includes illegal creditors who issue loans without a special license, as well as pseudo-brokers and illegal Forex dealers who attract money from citizens allegedly to invest in securities, derivative financial instruments or currency.^[7]

2019: Russia has 240 financial pyramids

For nine months of 2019, the Central Bank of the Russian Federation identified 240 organizations with signs of financial pyramids.

A significant part of the identified organizations, 90, existed in the form of Internet projects, 71 - in the form of LLC, others positioned themselves as consumer cooperatives and other financial institutions.

In general, in the first three quarters, the Central Bank identified 2,165 organizations operating illegally in the financial market. The vast majority of them, 1576 are illegal creditors.

2014: Central Bank spoke about the signs of a financial pyramid

In the summer of 2014, the Bank of Russia published signs of financial pyramids on its website so that citizens could timely recognize the "pyramid" in a financial organization.

As the Central Bank notes, there are several signs common to all "financial pyramids." This is the lack of a license to raise funds, the promise of high profitability, several times higher than the market level, guarantee of profitability (which is prohibited in the securities market), massive advertising, the absence of any information about the financial position of the organization, payments to new participants from funds contributed by other depositors, lack of own fixed assets, other expensive assets, lack of an accurate definition of the organization's activities.

The regulator advises citizens, first of all, to pay attention to proposals for the profitability of the funds attracted - if it significantly exceeds the offers of banking institutions, then there is a high probability of losing such investments. An equally important point is the opacity of investment mechanisms, as well as the absence of obvious signs of the economic activity of the organization, the Central Bank believes. For example, advertising promises high interest by investing in highly profitable instruments of the stock market, but during monitoring it turns out that in reality the organization does not trade on the stock exchange, and the payment of the promised interest is carried out only by attracting money from "new" participants.

"Saving and multiplying savings through financial market instruments can be completely risk-free in the form of a bank deposit. Either with a certain share of risk, but with the possibility of obtaining higher income in the medium and long term - this is investing in the stock market, independently or through licensed intermediaries. All other ways to generate high incomes in a short period of time in the financial market are from the evil, "the regulator warns

1994: Arrest of MMM founder Sergei Mavrodi

Outside the MMM financial pyramid office in Warsaw, 1994

A woman at a rally in support of the arrested Sergei Mavrodi, the creator of the 1994 MMM financial pyramid.

Operation for the seizure of financial documents "MMM" in the house of Sergei Mavrodi, 1994

Moscow schoolchildren at work, 1994.

1992

Sergey Mavrodi, founder of MMM - the most famous pyramid in Russia - in the company's office, early 1990s

1863: The first pyramid in Russia

The first domestic financial pyramid is the history of a public bank in the city of Skopin, Ryazan province. From 1863 to 1882, this bank, headed by Ivan Rykov, issued interest securities. Payments on these securities came from the funds of new depositors, who were attracted by high interest rates. Local authorities, influential persons in St. Petersburg, officials, stock exchanges, publicists worked for Rykov. Money went to Skopin from all over Russia. Shortly before the 20th anniversary, the bank closed, and investigators found only 2,392 rubles 35 kopecks at its cash desk and pantry. Then Rykov was tried and sent to Siberia, and the word "growl" began to mean about the same as the abbreviation MMM in Russia in the 2000s.

Notes