Russia's Central Bank Revealed Crypto Related Ponzi Scheme

Russia's Central Bank Revealed Crypto Related Ponzi Scheme

The financial scam project known as Cashberry lured thousands of unsuspecting people offering sky-high returns on traditional and cryptocurrency investments.

A group of Russian and foreign companies operating under the name of Cashberry enjoyed spectacular success, but the Central Bank of the Russian Federation found it to be a classic Ponzi scheme that attracted thousands, the Russian media outlet Interfax reports.

Cashberry's business is based on multilevel marketing, which implies that those who come later pay dividends to their predecessors. They pose themselves as a P2P investment platform where lenders and borrowers find each other. Cashberry used aggressive marketing techniques, including pushy advertising in mass media and social media, offering highly profitable investments with guaranteed returns in rubles and cryptocurrencies.

The company accepts payments both in fiat currencies (Russian rubles, US dollars, Euro, Hryvnia, Tenge) and in digital coins like Bitcoin and Ethereum, according to the information from their website. Targeting ordinary people without a deep understanding of investment mechanisms, they set a minimum deposit requirement at 1,000 RUB (about $12), making the trap available to virtually anyone.

Cashberry offers four main investment targets with unrealistically high returns. For example, potential investors could earn 550% per annum on cryptocurrency and 265% per annum by lending money to small and medium-size businesses.

The project managed to defraud tens of thousands of people and became one of the largest Ponzi schemes in recent years.

"This is one of the most popular financial pyramids revealed in recent years; it has developed activity in many regions all over the country. Moreover, they use an aggressive advertising strategy to involve as many citizens as possible", explained Valeriy Lyakh, the Director of Bad Practices Suppression Department in the Central Bank of Russia.

He also added that the Central Bank's inspection did not reveal any signs of real economic activity by the company and deemed it as a duty to warn citizens about the risks on investing money in this project as it contains the typical features of a Ponzi scheme.

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