$100M BTC Ponzi scheme Finiko founder arrested in Russia

The founder of one of Russias largest cryptocurrency scams to date is behind bars, and his accomplices are being sought by Russian authorities. Moscow police arrested Kirill Doronin on charges of allegedly defrauding $100 million from his investors, although some reports purport the figure could be over $1 billion.

Finiko was established in the city of Kazan in 2019 and posed as a legitimate BTC investment firm. The scheme promised its investors ludicrous returns—in this case up to 30% monthly. It also claimed its investors would be able to purchase apartments and cars at discounts with the assistance of the founders, according to the Moscow Times.

In December 2020, Finiko released FNK, its native digital currency. As per local reports, the founders would take the BTC from the investors and award them the FNK tokens.

And while the promises of ludicrous returns brought in several investors, it was in its word-of-mouth incentives that Finiko managed to lure the most clients. It would award huge referral fees to those that brought in new clients. This led to many bringing in their close friends and relatives, and for many of the new clients, this was their first interaction with digital currencies.

Before his arrest, Doronin had attempted to flee to Turkey, going as far as obtaining Turkish citizenship under the name Onur Namik. Russian police have now put his co-conspirators Marat Sabirov, Zygmunt Zygmuntovich and Edward Sabirov on their wanted list.

In the case of Sabirov, authorities said his involvement in the scam has brought to focus his other ventures, with the biggest concern being a joint venture he was involved in with Nikolay Nikiforov, a former Russian minister for communications.

Its not yet clear how much money the fraudsters made away with. By some local reports, the amount was a mere 70 million Russian rubles ($1 million). However, there are others, like Russian business publication The Bell that puts the amount at over $100 million.

And then there is Sergey Mendeleev, the founder of Garantex exchange who believes that the amount the scammers made away with was 10 times higher. According to him, in January this year, the Finiko team withdrew $100 million in BTC in just one week, sending the “entire Moscow crypto market on fire.”

Blockchain intelligence firm Crystal Blockchain identified 111 million USDT, 1.8 million USDC and 888 ETH (worth $2.8 million) which it tied to Finikos wallet. The founder of the analytics firm Kyrylo Chykhradze told one outlet that some of the tokens were sent to Uniswap, a decentralized digital currency exchange.