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Kazakhstan Police Shut Down ‘Fake Crypto Exchange’ and Arrest ‘Mastermind’

The flag of Kazakhstan mounted on a pole, fluttering in the wind.
Source: Iliya Mitskavets/Adobe

Police in Kazakhstan say they have shut down a suspected fraudulent crypto trading platform, with its alleged mastermind arrested.

Per Nur.KZ, the Ministry of Internal Affairs announced that a “23-year-old man” had been arrested.

The man’s name begins with L, and he was born in 1999, the police added.

Police said L was “suspected of deceiving residents” in the city of Almaty by operating a fake cryptocurrency platform.

An unnamed number of “local residents” came forward to police officers in the city’s Auezov district to make a statement.

According to them, the suspect, also an Almaty resident, offered them the ability to raise money by using his “online crypto platform.”

But when they attempted to withdraw their funds from the “platform,” they were reportedly unable to do so.

Police suspect that L “did not intend to fulfill his obligations to return the money.”

The platform is thought to have amassed “at least” some $7,000 worth of investment from at least 11 people.

But police suspect this may only be the tip of the iceberg.

Officers said they were conducting additional investigations “aimed at establishing additional episodes.”

Under Kazakhstan’s law, financial fraud “committed on a large scale” is punishable by imprisonment of up seven years, as well as “confiscation of property.”

Convicted individuals in such cases can be barred from “holding certain positions” or “engaging in certain activities for up to six years,” the media outlet noted.

Crypto Fraud – On the Rise in Kazakhstan?

Last month, police in Almaty warned of a rise in crypto scammers.

Per InAlmaty, officers warned that “with the advent of electronic means of payment and cryptocurrencies,” the “methods and types of internet fraud are increasing.”

Officers warned the public:

“Do not invest in dubious projects that promise big dividends by investing in cryptocurrencies […] and talk about the benefits of investing in their firm.”

Regardless, the nation remains a major hub of the global crypto-mining industry, and the government has openly courted industrial miners in the past.

A graph showing the distribution of Bitcoin mining hashrate from September 2019 to January 2022, by country.
Per-country Bitcoin mining hashrate from September 2019 to January 2022. (Source: Statista)

Also last month, it was revealed that miners in Kazakhstan paid some $7 million worth of taxes in FY2022.