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Kazakhstan investigates crypto-mining hotel allegedly operating as a Ponzi scheme – Mining Bitcoin News

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Authorities in Kazakhstan have launched an investigation into a mining hotel company 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 invest in 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 revenue from hotel users, details a press release. 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 the administration of President Kassym-Jomart Tokayev 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.

Keywords in this story

Crypto, crypto mining, crypto pyramid, Cryptocurrencies, Cryptocurrency, Financial Regulators, financial watchdog, Survey, Kazakhstan, mining hotel, Ponzi Scheme, Pyramid Scheme

Do you expect authorities in Kazakhstan to conduct any further investigations in the crypto space? Tell us in the comments section below.

Lubomir Tassev

Lubomir Tassev is a tech-savvy Eastern European journalist who loves Hitchens’ quote: “Being a writer is who I am, rather than what I do.” Besides crypto, blockchain and fintech, international politics and economics are two other sources of inspiration.

Image credits: Shutterstock, Pixabay, Wiki Commons, Artie Medvedev

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