The Agency for Regulation and Development of the Financial Market of the Republic of Kazakhstan published guidance describing common indicators of financial pyramid schemes, including requests for an upfront contribution and promises of abnormally high returns. It also cautioned that such entities often lack transparent financial information and do not hold the Agency’s licence to attract public deposits or conduct activity in the securities market. The notice explains that pyramid schemes may operate under multiple names but typically pay earlier participants using funds from later joiners, supported by aggressive online promotion, referral rewards, and the use of social networks and messaging apps. It distinguishes pyramids from legitimate network marketing by noting that the latter is based on selling products through a distributor network, whereas pyramids are based on investors’ money, and adds that schemes may masquerade as bookmakers or “investment companies” offering “high-yield” online projects where recruiting new participants is not necessarily required and organisers may disappear after raising sufficient funds. The Agency referenced criminal liability for establishing a financial pyramid under Article 217 of Kazakhstan’s Criminal Code, including confiscation of property, imprisonment of up to 12 years, and a lifetime ban on holding certain positions or carrying out certain activities.

Original source View in tracker