Police in Russia have confirmed they have arrested an individual in connection with the creation and promotion of a crypto pyramid scheme.
According to a statement from the Russian Ministry of Internal Affairs, the individual from Kazakhstan was arrested on an international warrant, accused of promoting a scheme that stole money from investors by promising undeliverable, low-risk returns from crypto investment.
The Ministry of Internal Affairs said there were as many as 300 individual cases connected to the pyramid scheme, including one investor who was defrauded 14 million Kazakhstan tenge, around $36,700.
Authorities said the individual had fled Kazakhstan early this year, and had been wanted by Interpol in connection with the frauds. The suspect is said to have confessed to crossing the border on horseback to gain undetected entry to Russia.
The authorities are now working with counterparts in Kazakhstan to arrange extradition under the arrest warrant.
While the specific identity of the individual remains unconfirmed, the arrest continues the pattern of enforcement action around major global cryptocurrency scams.
Just in the last few days, authorities worldwide have swooped on individuals thought to be connected to crypto pyramid scams. On May 21, police in Brazil made 10 arrests in connection with a fraudulent scheme thought to be worth $210 million.
Two days later, the U.S. Securities and Exchange Commission (SEC) initiated legal proceedings against a California resident connected to a multi-million dollar scheme, followed by the arrest confirmed from Russia.
Pyramid schemes work by enticing investors with the promise of fast, risk-free returns. However, the scam relies on a constant flow of new money to pay off disgruntled early investors, which ultimately collapses leaving most participants heavily out of pocket.
Pyramid schemes are an increasingly common type of scam afflicting the cryptocurrency sector, where a number of dubious investment products still persist.
The arrests in this latest case should serve as a reminder to those still operating crypto scams that authorities are closing in on these common types of fraud. Unfortunately, the news is unlikely to deter scammers from trying, with investors urged to exercise extreme caution in the current environment.
New to blockchain? Check out CoinGeek’s Blockchain for Beginners section, the ultimate resource guide to learn more about blockchain technology.
