Finiko Ponzi Scheme

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Finiko

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.

This exchange or platform is based in Russia, or the incident targeted people primarily in Russia.

About Finiko

"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."

This exchange or platform is based in Russia, or the incident targeted people primarily in Russia.

The background of the exchange platform, service, or individuals involved, as it would have been seen or understood at the time of the events.

Include:

• Known history of when and how the service was started.
• What problems does the company or service claim to solve?
• What marketing materials were used by the firm or business?
• Audits performed, and excerpts that may have been included.
• Business registration documents shown (fake or legitimate).
• How were people recruited to participate?
• Public warnings and announcements prior to the event.

Don't Include:

• Any wording which directly states or implies that the business is/was illegitimate, or that a vulnerability existed.
• Anything that wasn't reasonably knowable at the time of the event.

There could be more than one section here. If the same platform is involved with multiple incidents, then it can be linked to a main article page.

The Reality

This sections is included if a case involved deception or information that was unknown at the time. Examples include:

• When the service was actually started (if different than the "official story").
• Who actually ran a service and their own personal history.
• How the service was structured behind the scenes. (For example, there was no "trading bot".)
• Details of what audits reported and how vulnerabilities were missed during auditing.

What Happened

The specific events of the loss and how it came about. What actually happened to cause the loss and some of the events leading up to it.

Key Event Timeline - Finiko Ponzi Scheme

Date	Event	Description
July 16th, 2021 12:00:00 AM	Main Event	Expand this into a brief description of what happened and the impact. If multiple lines are necessary, add them here.

Total Amount Lost

The total amount lost has been estimated at $1,500,000,000 USD.

How much was lost and how was it calculated? If there are conflicting reports, which are accurate and where does the discrepancy lie?

Immediate Reactions

How did the various parties involved (firm, platform, management, and/or affected individual(s)) deal with the events? Were services shut down? Were announcements made? Were groups formed?

Ultimate Outcome

What was the end result? Was any investigation done? Were any individuals prosecuted? Was there a lawsuit? Was any tracing done?

Total Amount Recovered

There do not appear to have been any funds recovered in this case.

What funds were recovered? What funds were reimbursed for those affected users?

Ongoing Developments

What parts of this case are still remaining to be concluded?

Prevention Policies

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.