Russian Citizens Deceive Crypto Miners Worth IDR 4.4 Billion, Mining Equipment Turns Out to be Fictitious

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Police in the southern Russian city of Astrakhan have arrested a suspect accused of defrauding customers to buy crypto mining machines.

Authorities say the suspect made 19 million rubles ($315,000) from the fictitious sale of mining equipment to ten Russians and a number of foreigners.

Crypto Mining Machine Scam

The suspect, who is a resident of Kazan, the capital of Tatarstan, posted a false advertisement selling crypto mining machines and insisted on accepting an upfront payment.

“According to the investigation, the man placed an advertisement on the internet offering the sale of crypto mining equipment which he did not actually own,” explained the Astrakhan regional branch of the Ministry of Home Affairs, quoted from News.Bitcoin.com.

The suspect became a defendant in a criminal case in accordance with the Criminal Code of the Russian Federation Article 159 Paragraph 3 on large-scale fraud.

A press release from the authorities stated that the scammer promised victims that they would send a crypto mining machine after receiving the full payment up front.

A victim transferred 936 thousand rubles to the suspect's bank account. The suspect then closed all communication channels after receiving the money.

If convicted, the seller of the fictitious mining equipment could be sentenced to six years in prison.

Cases of fraud and theft related to crypto mining are on the rise in Russia along with the popularity of digital assets. Crypto is a profitable business for companies and an alternative income for Russian citizens.

Electricity consumption by Russia's crypto industry has been growing steadily since 2017. The trend is leading to a 150 percent increase in electricity consumption per year, according to crypto-mining importer Intelion Data Systems.

In June, $1.9 million worth of crypto mining equipment was stolen from a mining hotel in Irkutsk. One month later, a group of criminals robbed a large mining facility near Moscow.

Tatarstan, the suspect's hometown, became the site of Russia's biggest Ponzi scheme recently. The scheme called Finiko attracts victims from Russia, former Soviet Union countries, Europe and others with the lure of high profits when victims send Bitcoin (BTC) to fake companies.

According to a report by blockchain forensics firm Chainalysis, Finiko made more than US$1.5 billion in BTC in the past two years.

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