The country’s central bank has already highlighted dozens of fraudulent schemes that masqueraded as legit investment projects in the first half of the year and in the process defrauded people millions of money.
Cryptocurrency Ponzi Schemes
Most of the fraudsters operate online, whereby they appear to have found a way to draw people’s attention with enticing offers that are hard to resist. The operations mostly target people in central regions and large cities where cryptocurrencies buzz is on another level.
The fraudsters are also paying close attention to people with high incomes and looking for quick returns on investments. While the average investment in regular Ponzi schemes averages between 30,000 RUB and 50,000 RUB, it is emerging that crypto Ponzi schemes are attracting investments of between 80,000 RUB and 100,000 RUB.
Even though potential investors are becoming increasingly cautious and careful when choosing their next investments, the same has not prevented the fraudsters from finding their way and corning people.
Since the start of the year, legal entities and individuals have lost more than $4.3 million in illegal and fraudulent cryptocurrency related investments. Concerned with the rate at which such projects are sprouting up, the Russian Association of Cryptocurrencies and Blockchain RACIB has started listing unfair and potential ICO scam projects
The association believes the list will help potential investors find trustworthy investment opportunities in the burgeoning sector.
“The list of trusted companies will allow Russian and foreign market participants to base their work on trusted organizations and minimize the risk of fraud in the creation and development of Russian or foreign business in the field of mining, trading with cryptocurrency, blockchain technology, and ICO.” RACIB in a statement.
Call For More Awareness
The association has also created a whitelist that includes all the firms involved in the field of crypto mining as well as investment, marketing, and Initial Coin offerings. The whitelist consists of all organizations that have undergone verification to ensure what they are offering is legit.
Amidst the frenzy of activities in trying to curb fraudulent crypto and ICO projects, it is emerging that what the country needs is a well spelled out legal framework. President Vladimir Putin is on record ordering the regulation of cryptocurrencies and ICOs. Amidst the call, the legislation process appears to be dragging, a move that has left scammers to operate with ease to the disadvantage of most investors.
According to Plasma Pay payments system founder, Ilia Maximenko, people need to carry out deep pre-investment due diligence in order to stay clear of fraudulent schemes in the cryptocurrency space. When it comes to investing in ICO projects, Maximenko advice on investing in projects that already have a working product and only need additional funds to improve or accelerate development.
“If an ICO team have one developer per nine marketing managers, then it is clear that they want to sell it in the first place,” Maximenko said.