The founder of the crypto exchange BitZlato, Vitaly Dubinin, has been arrested by Russian law enforcement authorities for allegedly running a $1 million cryptocurrency scam. According to the report, Dubinin and his accomplice Dmitry Palchun tricked investors out of a combined $1 million from 2021 to early this year by promising high returns on their investments in Bitcoin and Ethereum. Dubinin was arrested on Wednesday in Russia’s northern city of Nizhny Novgorod in connection with the fraud.
The news was first reported by Kommersant, a Russian business newspaper. According to their report, Dubinin and Palchun ran a crypto trading company called BitZlato, which had no legal registration or license. They engaged in trading with crypto assets and accepted deposits from customers. However, they allegedly used the deposits solely to operate a Ponzi scheme, taking in more money than they were able to pay out.
The report also states that Dubinin and Palchun had set various rules for their operations and scripted answers to questions in order to further hide the illegal activity. For instance, customers were convinced that their deposits would be accepted only through their own special services, and not through cryptocurrency exchanges.
Moreover, the suspects also made false claims that BitZlato had a partnership with a Chinese cryptocurrency company, in order to attract more clients. Dubinin and Palchun have been charged with fraud and money laundering, and could face up to 10 years in prison if found guilty.
Dubinin’s arrest marks another example of the strict stance that Russian law enforcement is taking against cryptocurrency fraud. The authorities in the country have also started taking actions against illegal crypto mining operations, with over 700 miners in the country currently facing criminal charges.
Additionally, exchanges like BitZlato are often held to an even more stringent set of regulations, due to their large pool of customers and the potential for large-scale manipulation of the markets. This case clearly underscores that fact, as Dubinin is facing some serious charges due to his activities.
This Cyber News was published on thehackernews.com. Publication date: Mon, 23 Jan 2023 18:57:29 +0000