Kazakhstan investigates crypto-mining hotel allegedly operating as a Ponzi scheme – Mining Bitcoin News
Authorities in Kazakhstan have launched an investigation into a mining hotel business suspected of being a crypto pyramid as part of an ongoing crackdown on illegal cryptocurrency-related activity. The platform, called Bincloud, attracted investors through popular messaging apps.
Bincloud operators kept 16% of investor funds for themselves
As part of intensified efforts to combat crypto-related fraud, the Financial Supervisory Agency of Kazakhstan has opened a preliminary investigation into a crypto mining company allegedly operating as a financial pyramid scheme. It is headed by the watchdog department in the Western Kazakhstan region, the FMA said, as quoted by Russian crypto media.
The people behind the Bincloud mining hotel were recruiting investors via Whatsapp and Telegram messengers, convincing them to put money into the project offering mining equipment rental. As a reward, they were promised to recover daily 5 to 6% of the amount invested.
Fraudsters withheld 16% of hotel user revenue, a press release details. Financial regulators in Kazakhstan are urging victims of the alleged Ponzi scheme to contact the regional departments of the Financial Monitoring Agency and report their case.
The Bincloud investigation is part of a government push against crime involving cryptocurrencies. Kazakhstan police recently busted a gang, whose members allegedly coerced IT workers into running underground crypto farms on their behalf.
Illegal mining has earned its organizers an estimated monthly income of half a million US dollars. Media outlets have suggested that, like other similar ventures, the criminal group could not have acted without protection or affiliation with high-ranking officials or businessmen.
The business climate for crypto miners in Kazakhstan is changing
By maintaining artificially low electricity tariffs, Kazakhstan became a magnet for crypto mining companies when China cracked down on the industry in May 2021. However, things have changed since then and some companies have already moved their hardware to other mining hotspots.
While President Kassym-Jomart Tokayev’s administration has signaled it wants to develop the country’s crypto industry, the growing energy deficit blamed on the influx of miners has influenced its policies in the sector while beginning to crack down on mining illegal.
In February, Kazakhstan’s head of state stressed that Nur-Sultan’s government was not against cryptocurrency mining within the law, but insisted that all mining facilities be identified and inspected by the FMA. The order came as mining companies faced power cuts during the cold winter months.
In July, Tokayev signed a law that increased the tax burden for registered mining entities. The legislation introduced differentiated tax rates based on the average price of electricity consumed to mint digital coins, increasing the surcharge applied at the start of the year.
Do you expect authorities in Kazakhstan to conduct any further crypto investigations? Tell us in the comments section below.
Image credits: Shutterstock, Pixabay, Wiki Commons, Artie Medvedev
Disclaimer: This article is for informational purposes only. This is not a direct offer or the solicitation of an offer to buy or sell, or a recommendation or endorsement of any product, service or company. Bitcoin.com does not provide investment, tax, legal or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.