How crypto traders fall victim to scammers as $130bn sector remains unregulated amid police warning

How crypto traders fall victim to scammers as $130bn sector remains unregulated amid police warning

Scammers are preying on Russian crypto traders, using bogus peer-to-peer transactions and fake exchanges to help them steal money and cryptocurrencies, say police.

These fraudsters have become increasingly active on a range of messaging apps popular in Russia, the Ministry of Internal Affairs told Russian news agencyTASS.

“Victims transfer fiat currency or crypto to bank accounts and wallets, expecting to receive coins or rubles,” a ministry spokesperson said. “But instead, they receive nothing in return.”

The government estimates Russians trade $130 billion worth of crypto every year in a sector that remains almost entirely unregulated.

Bogus support staff

The ministry said scammers are increasingly posing as “intermediaries,” rather than buyers or sellers. The fraudsters increasingly pose as P2P trading platform employees, police said.

They create fake exchange support chats, send out official-looking text messages about deposits, or use duplicate accounts to deceive their would-be victims, the spokesperson said.

The exact size of Russia’s P2P market remains unknown. But in mid-2023, a Russian crypto security provider estimated traders in the country could access almost $300 million worth of trades per day.

That figure could soon be set to rise.

The finance ministry is aware most Russians trade crypto on overseas exchanges. This allows capital to flow overseas and deprives the Russian state of tax revenue, the Kremlin says.

Moscow has vowed to remedy this by introducing regulations this year aimed at forcing Russians to trade crypto on permit-holding platforms such as banking apps.

But the new rules will limit each citizen’s yearly crypto purchases to around $3,850. They will likely be accompanied by a block on the use of overseas-based crypto exchanges.

And that could lead to a further rise in P2P trades — a fact that scammers are preparing to exploit.

Tim Alper is a News Correspondent at DL News. Got a tip? Email him at tdalper@dlnews.com.