The increasing crimes around cryptocurrencies have brought significant concerns to regulators as well as investors. A recent report reveals a remarkable increase in the number of fake crypto exchanges in Russia.
According to local media reports, there has been a “significant” rise in the number of fraudulent crypto exchanges targeting Russian citizens and Russian-speaking crypto traders. The report writes:
Experts have noted a significant increase in the number of small [Russian-language] crypto exchanges, some of which turn out to be fraudulent.
Speaking on the topic, InformZashitae, a Russian security firm, also presented its stats. The security firm explained that crypto transactions linked to “unscrupulous exchange” had “grown by one and a half times” in recent weeks. Additionally, it stated that the number of such exchanges “continues to grow.”
Another cybersecurity firm named Positive Technologies had a similar opinion based on recent data around crypto exchanges. According to the firm’s report, data from March 2023 suggests that the number of fraudulent crypto exchanges had grown by three times within a year. The report also stated that “fake crypto exchange aggregators” were “also spreading.”
Sources reveal that experts have linked the increasing trend as “associated with an increase in the volume of crypto-fiat transactions” in Russia. In expert opinion, many Russians are looking for crypto-powered ways to evade economic sanctions.
Oleg Ogienko, the head of government relations at the crypto mining firm BitRiver, was quoted as saying:
It is natural that in any market that undergoes explosive growth – such as cryptocurrencies – all kinds of scammers become active.
Industry participants have claimed that “only the legalization” of crypto-related activities in Russia could put an end to the rise of these fraudulent exchanges. Ogienko suggested that crypto exchanges could initially operate in a government-controlled “experimental legal regime” which is also referred to as a sandbox.
Initially, the Russian Central Bank was strictly against using cryptocurrencies within its borders but had to eventually allow its usage in business dealings, including international trade. However, the invasion of Ukraine by Russia invited heavy sanctions, which include prohibiting European firms from offering any services linked to cryptocurrencies to the residents of Russia.
In recent times, Russia has been highly enthusiastic about cryptocurrencies and digital assets following the sanctions. In November, the Central Bank of Russia (CBR) published a report regarding the future of the digital asset sector in the country.
Not just that, Todayq News reported that the members of the Russian parliament are working towards framing amendments that would cover the launch of a national crypto exchange. Reportedly, the lawmakers are developing this initiative in collaboration with the Ministry of Finance and the Central Bank of Russia.
In addition, a bill on the regulation of crypto was submitted to the State Duma in November last year. Reportedly, the draft law couldn’t make any progress in the Russian parliament due to deep divisions between the Central Bank, law enforcement agencies, and pro-industry ministries.
The increase in the number of bogus crypto exchanges has concerned regulators across the globe. A few months back, Korean authorities jailed two high-ranking executives, Mr. Yang and Mr. Oh, who were associated with the fraudulent crypto exchange V Global, and have been sentenced to eight years and three years of prison, respectively. Reportedly, the executives had their involvement in defrauding investors with fraud schemes and offers.