Russian Citizen “Bitmama” Russian Woman Gets 7 Years $23 Million Crypto Scam

Key Insights:

• Russian woman, Valeria Fedyakina, “Bitmama,” received a seven-year prison sentence in Russia for organizing a $23 million Bitcoin pyramid scheme.
• She defrauded investors by pretending to help them bypass Western sanctions.
• She was arrested while attempting to flee to the UAE, and is set to spend nearly ten years behind bars.

Russia reportedly just witnessed one of its biggest crypto crime cases to date.

According to reports, a self-proclaimed crypto expert known as “Bitmama” has been sentenced to seven years in prison. Valeria Fedyakina, a 30-year-old mother from Simferopol, was found guilty of defrauding investors out of 2.2 billion rubles (worth approximately $23 million or £17 million at the time).

Here’s how the entire ponzi scheme played out, and stole tens of millions from investors in just 2 months.

Russian Woman Steals Millions From Investors

According to reports, Valeria Fedyakina set herself up as a trustworthy crypto professional. 

She operated under the brand names “Bitmama” or “Bitmama Finance,” and claimed to be running a worldwide operation through which investors could convert their funds into crypto offshore (mainly in Dubai). She had a simple business plan, and investors seemed to buy it.

Moreover, she offered to help clients bypass Western sanctions imposed on Russia after its Ukraine invasion, and swap rubles for crypto abroad.

She even went as far as to promise them a small bonus of 1% on every transaction, which seemed to work perfectly when combined with her public image. Many of these clients reportedly handed her bales of cash, hoping to take advantage of the crypto market boom.

A Pyramid Scheme All Along

Behind the scenes, however, “Bitmama” was running a pyramid scheme. 

Rather than investing client funds, she allegedly funneled the money into her own crypto wallets in the UAE. In just 60 days during 2023, four victims alone lost a staggering 2.2 billion rubles. 

Reports show that some days saw transactions as high as $15 million. These, which she often processed in luxury Moscow hotels where she arranged meetings with clients.

According to the Russian Investigative Committee, Fedyakina pretended to be an investor in the oil, gold and general commodity market. A spokesperson for the committee said she acted with “criminal intent to steal money or crypto by deceiving an ‘indefinite’ number of people.”

Attempted Escape and Arrest

Her downfall came, however, in September 2023. The pyramid scheme had already begun to unravel at this point, and investors were becoming suspicious. 

Bitmama attempted to flee Russia for the UAE, which is known for its crypto-friendly policies and historically loose KYC/AML enforcement. However, she was arrested at the border, while trying to leave the country.

Reportedly, the Russian woman was six months pregnant at the time, while Russian authorities held her in custody. She later gave birth to her daughter before being imprisoned with her daughter at Moscow’s SIZO No. 6 detention center.

The Russian Woman Trial and Sentencing

Last week, however, the Presnensky District Court in Moscow sentenced the Russian to seven years in a penal colony. This is in contrast to the initially sought 10 years from prosecutors under Russian fraud laws. 

In addition to jail time however, Bitmama has been ordered to repay the full $23 million in compensation to her victims:

Only that now, when adjusted for inflation, this figure is now close to £20 million. According to reports, this incident is not isolated. There is an ongoing trend in which individuals and entities in Russia are increasingly using crypto to avoid sanctions and even fund illegal operations.

A separate Reuters investigation earlier this year showed how Russia’s Federal Security Service (FSB) has allegedly been using Bitcoin to pay young, inexperienced spies across Europe. 

Overall, while Fedyakina “Bitmama” sits in a Russian penal colony, the crypto crime trend continues with new cases almost every day.