Kazakhstan Investigates Alleged Ponzi Scheme Operated at Crypto Mining Hotel

Kazakhstan crypto mining

As part of an ongoing crackdown on criminal activity related to cryptocurrencies, authorities in Kazakhstan have opened an inquiry into a mining hotel company that is thought to be a crypto pyramid. The platform, known as Bincloud, attracted investors using well-known chat services.

Operators of Bincloud kept 16% of investor money for themselves.

Kazakhstan’s Financial Monitoring Agency has launched a preliminary inquiry into a cryptocurrency mining operation that is reportedly operating as a financial pyramid scheme as part of increased measures to combat fraud related to cryptocurrencies. According to the FMA, who was cited by Russian crypto media, it is being directed by the watchdog’s section in the West Kazakhstan region.

Through the Whatsapp and Telegram messengers, the folks behind the Bincloud mining hotel attracted investors and persuaded them to invest by promising to rent out mining equipment. They were guaranteed a daily return on investment of between 5 and 6 percent.

According to a press announcement, the fraudsters withheld 16% of the hotel guests’ pay. Financial watchdogs in Kazakhstan are advising those who may have fallen victim to the alleged Ponzi scheme to get in touch with the local offices of the Financial Monitoring Agency and report their cases.

The Bincloud probe is a part of a government campaign to combat cryptocurrency-related crime. The police in Kazakhstan recently nabbed a group whose members reportedly coerced IT professionals into managing covert crypto farms on their behalf.

An estimated half million dollars in monthly income was generated by the illicit mining enterprise for its operators. According to media sources, the criminal organization could not have carried out its plan without protection or some connection to powerful politicians or businesses, as with prior such operations.

Kazakhstan’s cryptocurrency mining industry is undergoing change.

When China started to crack down on the business in May 2021, Kazakhstan maintained artificially low electricity costs and started to attract crypto mining companies. Since then, things have shifted, and several businesses have already relocated their hardware to additional mining hubs.

Although President Kassym-Jomart Tokayev’s administration has stated that it wants to boost the nation’s cryptocurrency business, the growing energy shortage attributed to the flood of miners has influenced its policy in the field. It has also begun cracking down on illegal mining.

The chief of state of Kazakhstan stated in February that the Nur-Sultan government is not opposed to legal crypto mining but stressed that all mining operations should be identified and examined by the FMA. During the chilly winter months, mining companies were experiencing power outages when the directive was issued.

A law that increased the tax burden for registered mining businesses was signed by Tokayev in July. The legislation increased the levy imposed at the beginning of the year and implemented differentiated tax rates based on the average price of the electricity consumed to mint digital currencies.

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