Kazakhstan became a hotspot for crypto mining following China’s sweeping ban in May last year. Miners swiftly moved their equipment and operations to Kazakhstan and other regions with more favorable laws and low electricity costs.
Kazakhstan authorities are investigating a crypto mining hotel business that is suspected to be a pyramid scheme. The country’s Financial Monitoring Agency has launched a pre-trial investigation into the BinCloud mining hotel.
It has been revealed that the alleged fraudsters recruited investors through popular messaging apps WhatsApp and Telegram. The investors were offered mining equipment rental services with a promise of 5% to 6% of their investments daily. However, according to a press release by the Financial Monitoring Authority, when it was time for clients to make withdrawals, 16% of their earnings were withheld. Those affected by the alleged BinCloud scam were advised to contact local departments of the Authority.
The BinCloud investigation is part of a larger government crackdown on cryptocurrency-related crime. Police recently arrested 23 members of a gang alleged to have been forcing people knowledgable in IT and crypto to run illegal mining operations. It is estimated that the group made profits of between $300,000 to $500,000 per month. Due to the sophisticated nature of the operation, it was suspected that the gang had external backing. Local media reports have linked some major crypto mining activities to prominent officials and business people.
Kazakhstan became a hotspot for crypto mining following China’s sweeping ban in May last year. Miners swiftly moved their equipment and operations to Kazakhstan and other regions with more favorable laws and low electricity costs. While the government generally supports crypto mining, the energy deficit caused by the influx of crypto miners has brought scrutiny to the industry and a crackdown on illegal mining.
Earlier this year, President Kassym-Jomart Tokayev emphasized that all crypto mining facilities be identified and inspected by the Financial Monitoring Authority. The president also called for an increase in the electricity surcharge miners were expected to pay to be implemented by April.
“The current rate is negligible. I instruct the government to work out a multiple increase of this tax as soon as possible,” he said, adding ”Those who want to work in this field must have an appropriate license, receive electricity at adequate tariffs, declare income and pay taxes, launch green energy projects.”
Last month, President Tokayev signed a law that introduced varying tax rates depending on the average cost of minting.
Mercy Mutanya is a Tech enthusiast, Digital Marketer, Writer and IT Business Management Student.
She enjoys reading, writing, doing crosswords and binge-watching her favourite TV series.
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