Valeria Fedyakina Sentenced for Cryptocurrency Fraud
A Moscow court has sentenced Valeria Fedyakina, a 30-year-old woman from Simferopol, to seven years in a penal colony after she was found guilty of executing a sophisticated pyramid scheme that defrauded investors of an astonishing $23 million (approximately 2.2 billion rubles) in Bitcoin over a brief span of just 60 days in 2023. Operating under the alias “Bitmama”, she falsely presented herself as a credible cryptocurrency investor with a network of global offices, assuring clients that she could securely transfer their funds abroad using cryptocurrency to navigate Western sanctions.
Details of the Fraud
Instead of facilitating these transactions, prosecutors in Russia revealed that Fedyakina systematically drained her clients’ accounts, culminating in one of the largest crypto scams in the country’s recent history. The fraudulent activity coincided with increasing Western sanctions, which drastically restricted Russia’s access to traditional banking systems, encouraging many Russians to look for alternative methods, such as cryptocurrency, to manage their finances overseas.
“Many Russian crypto criminals exploit less regulated jurisdictions, like parts of the UAE, to facilitate cross-border transactions and evade detection.” – Deddy Lavid, CEO of Cyvers
Legal Consequences and Operations
On June 24, the Presnensky District Court in Moscow imposed a seven-year prison sentence on Fedyakina and mandated that she repay her victims the full $23 million. The prosecution had pushed for a more severe 10-year penalty under Russian fraud laws. Fedyakina’s operation was reportedly informal, unfolding in luxury hotel settings in Moscow, where she secured deals and transferred funds through various crypto wallets, ultimately funnelling money to the UAE.
Authorities indicated that she misled clients about investing in oil, minerals, and other transport-related activities while actually diverting funds into her cryptocurrency wallets. Initially, clients were bringing in amounts between $2 to $3 million (200-300 million rubles) daily to her office, with these figures soaring to nearly $15 million (1.5 billion rubles) a day as her scheme gained momentum.
Arrest and Current Situation
Following her arrest on September 15, 2023, while attempting to escape to the UAE, it was reported that Fedyakina was six months pregnant at the time. She subsequently gave birth in custody and remains with her newborn in Moscow’s SIZO No. 6 detention facility.
Broader Implications
This particular case highlights a growing trend in Russia where unsanctioned operations in cryptocurrency starkly contrast with state-sanctioned crypto initiatives. According to Alice Frei, a director at Outset PR, the disorganized nature of such fraud schemes makes them opportunistic, often sourcing funds from scattered victims through scams and deceptive investment offers. She noted that these fraudsters typically utilize stablecoins, like USDT or USDC, which provide stability and ease for international transactions.
Additionally, blockchain investigations have shed light on Russia’s increasing dependence on cryptocurrencies for various activities, including intelligence funding. A recent report by Reuters indicated that the Federal Security Service (FSB) of Russia has begun using Bitcoin to pay spies across Europe, often targeting young, untrained individuals. In a related development, U.S. authorities have charged Ian Mausner with orchestrating a $500 million cryptocurrency fraud, asserting that he duped investors while concealing transactions linked to Russia that could breach international sanctions.
