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 activity related to cryptocurrencies. platform called Bincloud, which was attracting investors through a popular messaging app.
Bincloud operators kept 16% of investors’ funds for themselves
In an intensified effort to combat crypto-related fraud, Kazakhstan’s Financial Surveillance Agency has launched a pre-trial investigation into a crypto-mining business allegedly functioning as a financial pyramid scheme. It was led by the Department of Surveillance of the West Kazakhstan Region, the FMA announced, quoted by Russian crypto media.
The people behind Bincloud Mining Hotel recruited investors through Whatsapp and Telegram messengers and persuaded them to put money into a project offering mining equipment rental. As a reward, they were promised to get back 5-6% of their investment every day.
The scammers withheld 16% of the hotel users’ income,detailed in a press release. Kazakhstan’s financial regulator is urging victims of suspected Ponzi schemes to contact the regional department of the Financial Surveillance Agency and report their cases.
The Bincloud investigation is part of the government’s offensive against crimes involving cryptocurrencies. Police in Kazakhstan recently arrested a gang whose members allegedly forced IT professionals to run an underground crypto farm on their behalf.
The illegal mining generated an estimated US$500,000 monthly income for the organizers. Media reports suggest that, as with other similar operations, the criminal group could not have acted without protection or some affiliation with high-ranking officials or businessmen.
The Business Environment for Crypto Miners in Kazakhstan Is Changing
Kazakhstan, which maintains artificially low electricity rates, became a crypto mining company when China cracked down on the crypto mining industry in May 2021. It became a magnet. However, things have changed since then, with some companies already moving their hardware to other mining hotspots.
While President Kassym-Jomart Tokayev’s administration has indicated that it wants to develop the country’s crypto industry, the growing energy shortage caused by the influx of miners has affected the sector’s policies, while initiating a crackdown on illegal mining.
In February, the head of state of Kazakhstan stressed that the government of Nursultan is not against crypto mining within the law, but insisted that all mining facilities should be identified and inspected by the FMA. The order was issued at a time when mining companies were facing power outages during the cold winter months.
In July, Tokayev signed a law increasing the tax burden on registered mining entities. The law introduced differentiated tax rates based on the average price of electricity consumed to mint digital coins and increased surcharges that went into effect earlier this year.
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