Russian Jailed for Swindling Buyers of Mining Equipment Worth Over $300k

By: Michael Wilson

September 6, 2022 2:05 AM

A man wanted for allegedly scamming people looking to buy cryptocurrency miners has been detained by police in the southern Russian city of Astrakhan. Police say the suspect made millions of rubles off of fake sales of mining equipment to Russians and foreigners.

Authorities confirmed Russian made money off selling fake cryptocurrency mining hardware.

A man from Kazan, the capital of the Russian Republic of Tatarstan, has been arrested in Astrakhan, in southern Russia, on charges of swindling 10 locals and several foreigners who attempted to purchase mining equipment from him.

The Russian used fake ads to sell cryptocurrency mining equipment and demanded upfront payment. According to investigators, he made roughly 19 million rubles (around $315,000) using this method.

The investigation revealed that the young man had made enticing online offers to sell cryptocurrency mining equipment that he did not actually possess. According to the Astrakhan region's MIA division, "he is now the defendant in a criminal case initiated under Part 3 of Article 159 of the Criminal Code of the Russian Federation (Large-scale fraud).

According to the press release, the suspect told his victims that he would send them crypto miners if they paid him in advance. After one of the buyers wired the seller a total of 936,000 rubles, the two parties went silent. The counterfeit mining hardware trader faces up to six years in prison if found guilty.

While crypto mining has become increasingly popular in Russia as a lucrative business for companies and a supplementary income source for many ordinary Russians, so too has the incidence of fraud and theft in the industry. Scammers broke into a hotel for miners in Irkutsk, Russia, and made off with $1.9 million worth of mining equipment in June. A major crypto farm was robbed by masked men in July, not far from Moscow.

The region of Tatarstan that is home to the arrested fraudster has become the center of Russia's largest Ponzi scheme. Investors from all over the world, including those in Russia, the former Soviet space, Europe, and beyond, were duped into sending bitcoin to the Finiko pyramid by the promise of massive returns. Chainalysis, a blockchain forensics firm, released a report claiming the scam had collected over $1.5 billion in Bitcoin over the course of two years.