FINIKO

DESCRIPTION OF EVENTS

"Finiko is an automatic profit generation system operating on the exchanges trading." "Automatic profit generation system." "The system works on the predicted risks principle, which are managed by statistics of decentralized products."

"With such lack of information and Finiko being unregulated, funds are not safe. Security of funds is a huge problem with unregulated Investment Companies. A red flag that we noticed is Finiko is withholding vital information to users."

"Pyramid schemes primarily involve the use of recruiting tactics to entice a greater number of investors to participate. Essentially, existing stakeholders are rewarded for bringing in more money."

"The financial pyramid has proven particularly active in Russia and Ukraine. Affected by floundering financial systems, currency devaluation and limited investment opportunities, many Russians and Ukrainians are especially vulnerable to scams like Finiko."

"Besides Russian citizens, the crypto pyramid scheme attracted investors from a number of countries in the region and beyond such as Kazakhstan, Kirgizstan, Hungary, Austria, Germany and the U.S."

"Regulators are said to have begun looking more closely at Finiko at the end of 2020, and the investment scheme ultimately drew a warning from the Bank of Russia, which reported that it showed "signs of a 'pyramid scheme'" in a February notice."

"Authorities in Kazan arrested the scheme's founder, Kirill Doronin, at the end of July, confiscating Russian and Turkish passports, including one Doronin acquired just weeks earlier under the name Onur Namik. He is set to be released at the end of September."

"Finiko's main Telegram was active up until July 21, advertising Doronin's new "project," OmFin. Finiko's help account remains active. Doronin himself had, in the past, run a popular Instagram account, but went nearly four years without posting until sending out an image of Bitcoin."

"Doronin has reportedly offered up information on his co-founders Zygmunt Zygmuntovich and Marat and Edvard Sabirovy, but claims not to know where they are."

"[T]he official losses from the bitcoin scam, which has become one of Russia’s greatest financial pyramids in recent years, have surpassed 1 billion rubles (almost $14 million). Because of the magnitude of the scam, the Federal Ministry of the Interior was forced to take over the investigation."

"With over 3,300 complaints submitted thus far, the crypto pyramid scheme has drawn investors from a variety of nations in the area and beyond, including Kazakhstan, Kirgizstan, Hungary, Austria, Germany, and the United States. Finiko received nearly $1.5 billion in bitcoin in less than two years before collapsing last summer, according to data from blockchain forensics firm Chainalysis."

There have been "over 3,300 complaints filed so far. According to data from blockchain forensics firm Chainalysis, Finiko received over $1.5 billion worth of bitcoin in less than two years before it collapsed this summer."

"Meanwhile, the total of the officially registered losses to the cryptocurrency scam, one of Russia’s largest financial pyramids in recent years, has exceeded 1 billion rubles (almost $14 million). The scale of the fraud forced the federal Ministry of Interior to take over the investigation."

"[T]he Interior Ministry of the Russian Federation has announced that the officially recognized damages inflicted on Finiko investors exceed 1 billion rubles (almost $14 million). Due to the magnitude of the fraud, the federal department has taken over the criminal investigation into the case. Initial estimates pointed to 250 million rubles in losses (almost $3.5 million)."

"In the early stages of the investigation, judicial authorities in Tatarstan had acknowledged 80 victims of the crypto Ponzi scheme. According to the ministry, however, the number of applications filed by defrauded investors has already reached 3,300. Among them, besides Russian citizens, are residents of Germany, Austria, Hungary, Kazakhstan, Kyrgyzstan, the United States, and other countries."

"According to a recent report by blockchain forensics company Chainalysis, the Russia-based Finiko, a non-existent entity, has received more than $1.5 billion worth of bitcoin between December 2019 and August 2021. The digital cash came in 800,000 separate cryptocurrency deposits from investors lured with promises of monthly returns of up to 30%. The crypto pyramid collapsed this summer."

"According to an article published by Business Online a few days earlier, investigators believe the three fugitives have escaped to the United Arab Emirates through Belarus. However, some sources familiar with the Finiko case claim that Zygmuntovich, considered to be Doronin’s right hand, is actually hiding in Abkhazia, the Russia-backed breakaway republic of Georgia. A businessman from Tatarstan, Eric Gafarov, has been quoted as stating that the Finiko co-founders are currently in Turkey."

"Tatarstan’s highest court has rejected appeals against arrest warrants issued for three co-founders of the notorious Finiko crypto pyramid. The top representatives of the Ponzi scheme, accused of large-scale fraud in Russia, are still hiding abroad, media reports reveal."

"The Supreme Court of Tatarstan, a republic of the Russian Federation, has confirmed the arrest warrants issued in absentia for Zygmunt Zygmuntovich and Marat and Edward Sabirov. The three wanted men are close associates of Finiko’s founder Kirill Doronin."

"Doronin, an Instagram influencer whose name has been linked to other fraudulent schemes, was arrested in July. Then in September, authorities detained the pyramid’s vice president, Ilgiz Shakirov, as well as two women, Lilia Nurieva and Dina Gabdullina, who have allegedly lured thousands of investors with promises for high returns."

"Zygmuntovich and the Sabirov brothers, however, managed to leave the country and avoid detention. In Tatarstan’s highest court, they were represented by government appointed lawyers who appealed the initial decision to seek their arrests internationally."

"During the proceedings, Marat Sabirov’s defense attorney, Gulnaz Nafieva, insisted her client had already been out of the country when the criminal case was initiated. Despite this argument, the court did not uphold her appeal to revoke Sabirov’s arrest warrant, Inkazan.ru reported.'"

"The arrest warrants issued in absentia for Zygmunt Zygmuntovich and Marat and Edward Sabirov have been confirmed by the Supreme Court of Tatarstan, a republic of the Russian Federation. Finiko’s founder Kirill Doronin’s three wanted guys are close pals."

"The region is historically crypto-active. It has seen an uptick in illicit use of cryptocurrencies in the past year, largely tied to the pyramid scheme Finiko. Chainalysis found that "Between December 2019 and August 2021, Finiko received over $1.5 billion worth of Bitcoin in over 800,000 separate deposits.""

"Pyramid scheme Finiko managed to gather over $1.5 billion in bitcoin, primarily from Russia and Ukraine, per recent findings from blockchain analytics firm Chainalysis."

"Appeals against arrest warrants issued for three co-founders of the renowned Finiko crypto pyramid were dismissed by Tatarstan’s highest court. According to media sources, senior Ponzi scheme officials who are suspected of large-scale fraud in Russia are still hiding abroad."

Finiko created a platform where investors put up funds and received 1%/day in interest. The scheme grew to become one of the largest frauds in the world. Senior officials from the scheme are still in hiding, and it looks like investors will face significant losses.

HOW COULD THIS HAVE BEEN PREVENTED?

The lack of a standard regulatory framework allows schemes such as this to persist, since investors do not come to expect any oversight or transparency from companies they invest with.

Check Our Framework For Safe Secure Exchange Platforms

Russian Court Confirms Arrest Warrants for 3 Finiko Founders – Bitcoin News (Sep 20)
https://www.facebook.com/finikoeurope (Sep 21)
Finiko (Sep 21)
Wayback Machine (Sep 21)
Wayback Machine (Sep 21)
Finiko Review - ScamWatcher (Sep 21)
Russian court has confirmed arrest warrants for three Finiko founders - TechStory (Oct 11)
Russian Police Arrest 2 Women, High-Ranking Members of Finiko Crypto Pyramid – Bitcoin News (Oct 24)
Concerns about Finiko, need help and advice : antiMLM (Oct 24)
Court Denies Appeal of Founder Involved in Alleged $1,500,000,000 Bitcoin Ponzi Scheme - The Daily Hodl (Oct 24)
Russian pyramid scheme netted over $1.5 billion in bitcoin throughout Eastern Europe (Oct 24)
Вахитовский суд арестовал сооснователя Finiko Кирилла Доронина (Oct 24)

More case studies

ThorChain
Chaosnet Exploit

Array Finance Price
Calculation Error