Eastern Europe a hub for crypto scams: Chainalysis

September 6, 2021
Eastern Europe is fast emerging as a crypto scamming hub. Crypto addresses in East European countries have the second-highest rate of exposure to illicit addresses, with Africa topping the chart and Latin America ranking third, the excerpt details. However, Eastern Europe has a much larger overall cryptocurrency economy than either of the other regions in the top three. Among the world’s regions with a total crypto transaction volume of at least $400 million, Eastern Europe is the only one where illicit activity exceeds 0.5% of the total value sent and received, Chainalysis notes in a preview of its 2021 Geography of Cryptocurrency report.
Also, Eastern Europe sends more cryptocurrency to darknet markets than any other region. This is largely due to activity involving Hydra Market. Hydra is the world’s biggest darknet market and caters only to users in Russian-speaking countries throughout Eastern Europe. Among the eastern Europe’s countries, Ukraine accounted for most of this activity, and sends more web traffic to scam websites than any other country, more than doubling the total web visits of the second-ranked country.
The major scam that is victimizing the cryptocurrency users in the region is Finiko. Finiko was a Russia-based Ponzi scheme that collapsed in July 2021, soon after users reported they could no longer withdraw funds from their accounts with the company. Finiko invited users to invest with either Bitcoin or Tether, promising monthly returns of up to 30%, and eventually launched its own coin that traded on several exchanges. Between December 2019 and August 2021, Finiko received over $1.5 billion worth of Bitcoin in over 800,000 separate deposits.
The report also suggests that many such ransomware strains affiliated with Russia and other Eastern European countries have code that prevents them from being deployed against operating systems in detects as being located in a Commonwealth of Independent States (CIS) country — the CIS is an intergovernmental organization of former Soviet states.
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