Law enforcement agencies in Kazakhstan have detained members of a criminal gang suspected of using blackmail and extortion to force IT professionals to operate an underground facility for cryptocurrency mining. The criminals allegedly earned up to US$500,000 per month from their business.
Kazakhstan busts illegal crypto mining ring, detains dozens
Authorities in Kazakhstan have arrested a group of “criminally oriented individuals” and former convicts who pressured information and crypto-tech savvy people to run illegal installations for cryptocurrency production. Many of the 23 arrested had a history of debt collecting and extortion, the country’s Interior Ministry said this week in astatement
The gangs were making estimated profits in the range of $300,000 to $500,000 per month as a result of their illicit crypto-mining activities, the ministry further revealed. During the search, police found numerous weapons, including pistols, ammunition, and Kalashnikov assault rifles. One of the gang members turned out to be a military serviceman.
Eurasianet reports that investigators said they were able to establish that the operation was highly sophisticated, indicating that the group was not working entirely alone. In recent months, it has become clear that major mining operations in Kazakhstan are tied to high-ranking officials and influential businessmen, the online portal dealing with developments in the region added.
Kazakhstan has become a hotspot for crypto mining after China cracked down on the industry last May. Mining companies were attracted by its low electricity rates, but their influx has exacerbated energy shortages. The Nur Sultan government responded by taking steps to reduce consumption in the sector by repeatedly cutting electricity supplies to licensed mining companies, increasing taxation, and pursuing illegal miners.
This spring, the Financial Surveillance Agency discovered and shut down more than 100 underground mining operations. In describing the offensive, the agency noted that among the operators were companies affiliated with Borat Nazarbayev, brother of former Kazakhstan President Nazarbayev, and Alexander Klebanov, who heads the Central Asian Power Corporation.
Some of the other closed facilities were associated with Kairat Sharipbayev, former chairman of the state gas distribution company Qazaqgaz and believed to be married to Nazarbayev’s eldest daughter Daliga. Yerlan Nigmatullin, brother of the former Speaker of the House of Representatives, is also suspected of profiting from unauthorized mining, the report detailed.
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