Kazakhstan Investigates Crypto Mining Hotel Allegedly Operating As 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 activities related to cryptocurrencies. The platform, called Bincloud, lured investors through popular messaging apps.

Bincloud operators kept 16% of investors’ funds for themselves

Amid intensified efforts to combat crypto-related fraud, Kazakhstan’s financial watchdog agency has launched a preliminary investigation into a crypto-mining operation that allegedly operates as a financial pyramid scheme. It is led by the watchdog’s department in the West Kazakhstan region, the FMA announced, cited by Russian crypto media.

The people behind the Bincloud mining hotel recruited investors through Whatsapp and Telegram bids, convincing them to put money into the project that offers mining equipment rental. As a reward, they were promised to get back 5 to 6% of the invested amount daily.

The fraudsters withheld 16% of the hotel users’ income, says a press release. Kazakhstan’s financial regulators are urging victims of the suspected Ponzi scheme to contact the regional branches of the Financial Monitoring Agency and report their cases.

The Bincloud investigation comes as part of a public offensive against crime involving cryptocurrencies. Kazakhstan’s police recently caught a gang, the members of which allegedly forced IT specialists to run underground crypto farms on their behalf.

The illegal mining provided the organizers with an estimated half a million US dollars in monthly income. Media reports have suggested that the crime group, just like other similar enterprises, could not have operated without protection or some connection to high-ranking officials or businessmen.

The business climate for crypto miners in Kazakhstan is changing

By maintaining artificially low electricity prices, Kazakhstan became a magnet for cryptominers 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 indicated that it wants to develop the country’s crypto industry, the growing energy deficit caused by the influx of miners influenced its policies in the sector, while also beginning to crack down on illegal mining.

In February, Kazakhstan’s head of state emphasized that the Nur-Sultan government is not against cryptomining within the law, but insisted that all mining facilities be identified and inspected by the FMA. The order came as mining companies faced power outages during the cold winter months.

In July, Tokayev signed a law raising the tax burden on registered mining companies. The legislation introduced differentiated tax rates based on the average price of the electricity consumed to mint digital coins, and increased the surcharge enforced at the beginning of the year.

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

Lubomir Tassev

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