tl;dr
Valeria Fedyakina, a Russian woman known as "Bitmama," was sentenced to seven years in prison by a Moscow court for orchestrating a $23 million Bitcoin pyramid scheme in 2023. She posed as a legitimate crypto trader promising to help clients transfer money abroad to evade Western sanctions but inste...
Valeria Fedyakina, a Russian woman known by the alias "Bitmama," was sentenced to seven years in prison by a Moscow court for orchestrating a $23 million Bitcoin pyramid scheme in 2023. She posed as a legitimate cryptocurrency trader, promising clients she could help them transfer money abroad to evade Western sanctions, but instead defrauded investors by emptying their accounts. Fedyakina operated informally, funneling funds through crypto wallets in the UAE and deceiving clients with false investment claims related to oil, gold, and other commodities.
Her fraudulent scheme unfolded within just 60 days and became one of Russia’s largest recent crypto scams. The tightening of Western sanctions had made cryptocurrency an appealing alternative for Russians seeking to move money overseas, a dynamic Fedyakina exploited ruthlessly. She was arrested in September 2023 while attempting to flee to the UAE, even though she was six months pregnant. She later gave birth while incarcerated and remains detained with her daughter.
The court ordered Fedyakina to pay $23 million in compensation to the victims and sentenced her to serve time in a penal colony. Prosecutors had initially sought the maximum 10-year sentence under Russian fraud laws. Industry experts noted the crime illustrates how criminals exploit regulatory arbitrage, moving funds across jurisdictions like the UAE, where anti-money laundering measures are weaker, to mask origins and facilitate cross-border transfers.
This case stands in contrast to state-backed crypto operations in Russia, which are typically more organized and strategically driven. Criminal schemes such as Fedyakina’s rely on opportunistic scams involving dispersed victims, often employing phishing and false investment promises. Such frauds often favor stablecoins like USDT or USDC for their value stability and ease of international use.
Meanwhile, broader investigations reveal Russia’s growing dependence on cryptocurrency for various activities, including funding intelligence operations. Notably, the Federal Security Service (FSB) reportedly used Bitcoin to pay spies across Europe. In related news, U.S. authorities charged an individual with running a $500 million crypto fraud implicating Russian-linked markets and efforts to obscure international sanction violations.