Fifth of Finiko Investors Parted With Over 1 Million Rubles
Russia still struggles to comprehend the scale of its biggest financial fraud since the MMM pyramid scandal in the 1990s. Although Finiko has officially reported losses of 1 billion rubles (close enough to $14 million), estimates suggest that the sum could be higher than $4 billion. Chainalysis reports that the Ponzi scheme received more than $1.5 billion in bitcoin within a span of two years.
People from Russia, Ukraine, and other former Soviet countries, EU member states, as well as the U.S., sent 800,000.000 deposits to Finiko. Despite the fact that only 3,300 victims have been identified, the true number of victims is likely to be much higher. The fraud was so large that the Moscow Interior Ministry took over the investigation from Tatarstan law enforcement, where Finiko was located and many of its key members were arrested.
Local media reported that around 200 defrauded investors filed complaints to the Federal Foundation for Protecting Investors and Shareholders Rights in Russia. Marat Safiulin (head of the foundation) told Ufatime.ru about how 154 investors were surveyed over the telephone regarding their investments.
The foundation has determined that investors have lost an average of 724,000 Russian rubles, or more than $10,000, based on their feedback. 22 percent of investors lost over 1 million rubles, or almost $14,000. Another 73% sent Finiko at most 300,000. Over half of those surveyed took out loans to invest in Ponzi schemes.
Finiko was never registered as a legal entity. It advertised itself as an “automatic profits generation system”. The pyramid promised enticing returns if people sent their money. This money would be used to invest in crypto and shared with them. Investors were promised that they could get fast and high returns up to 30%, which would allow them to pay off a loan, purchase a car or other property at a discounted price, or withdraw cash as they needed it.
In December 2020, Finiko’s offices in Tatarstan, Kazan’s capital city, were searched for the first time. The Central Bank of Russia identified its activities as being part of a pyramid scheme in June 2019. The scam attracted new investors despite this.
In July, the Ponzi scheme stopped paying its payments and collapsed. Russian Republic of Tatarstan authorities has detained several high-ranking Finiko executives. This includes the pyramid’s founder Kirill Doronin and two vice presidents Dina Gabdullina and Lilia Nurieva. Lilia Nurieva rose to the rank of a so-called “10th star” and was awarded international arrest warrants for Zygmunt Zygmuntovich and Marat Sabirov. They managed to escape the Russian Federation just before the investigation began in July.