- Lilian Nurieva, former Head of Networks at Russian crypto Investment fund Finiko, has been sentenced to three years for defrauding private investors and participating in an organized criminal group.
- The $55 million pyramidal scheme is considered the second-largest financial scam in Russia’s post-Soviet history by the Federal Foundation for the Protection of Investors and Shareholders Rights.
- “This scheme not only highlights the vulnerabilities of investors in the crypto market but also the severe consequences for those orchestrating these scams,” remarked an official from the investigation team.
Crypto investment fund Finiko is revealed as a Ponzi scheme, leading to significant financial losses for thousands of investors and a three-year prison sentence for former executive Lilian Nurieva.
Crypto Investment Fund Turns Ponzi Scheme
In 2021, Russian authorities began investigating the ‘crypto investment fund’ Finiko for fraud and organized crime. According to the investigation, the fund was a Ponzi scheme that took millions in investors’ money. From 2018 to 2021, Finiko served as a pyramidal scheme presented as a crypto fund to investors. The scam’s main organizer and beneficiary, Kirill Doronin, traveled the country offering master classes, attracting thousands of clients. Alongside his accomplices, Doronin created a criminal community to systematically embezzle citizens’ money. The criminals would approach potential clients, stating they had developed a “unique automatic profit generation system” that “guaranteed” massive returns in cryptocurrencies, including Bitcoin.
Initial Success and Subsequent Collapse
Users would receive their dividends at first and be able to withdraw their money in BTC. However, things started to take a left turn for investors after Finiko’s crypto token started to devalue in 2021. In a month, the firm’s offices abruptly closed, and its website was shut down, leaving investors empty-handed. Donorin assured investors that the crypto fund was experiencing technical failures, but it was later established that his associates had already fled the country with investors’ money.
First Finiko Executive Sentenced
Lilia Nurieva, one of Finiko’s executives, has been found guilty of defrauding investors by the Vakhitovsky District Court of Kazan. Nurieva, a key participant in the crypto scheme, was given a “mild” sentence for collaborating with the prosecutors. The former executive was originally sentenced to four and a half years for committing fraud and participating in an organized criminal association. However, Nurieva will only serve three years in prison as her pre-trial detention time will be counted as part of the sentence. According to local reports, prosecutors requested six and a half years for the Russian executive, but the former Head of Networks was able to reduce her time due to a pre-trial agreement. This deal allowed Nurieva to avoid facing up to ten years in prison. Moreover, the executive fully admitted to the charges and collaborated with the investigation, facilitating to be tried separately from the other defendants. Her lawyer, Maria Belousova, stated that the prosecutors’ accusations against her client were “fair.” She also noted that Nurieva was the only one among the defendants who had invested her money in the scheme. Per Belousova, the former Finiko executive invested 40 million rubles in the investment fund before becoming part of the organization: “When she joined the criminal association, there were illusions that it was not criminal and illegal. Then, during communication with top executives, clarity came.”
Conclusion
The Finiko case serves as a stark reminder of the risks associated with unregulated investment opportunities, especially in the volatile crypto market. Investors are urged to conduct thorough due diligence and remain skeptical of schemes promising guaranteed returns.
