Tass news agency reported that police in the Russian Irkutsk Oblast have launched an investigation of the operators of a mining hosting facility suspected of defrauding clients and stealing their expensive coin minting hardware, quoting the region’s Main Directorate of the Interior Ministry.
Law enforcement officials explained that in anticipation of quick earnings, the miners handed over their devices to those who were running the mining hotel. However, the latter eventually stopped all payments to their customers and failed to return the expensive machines.
“A criminal case was initiated based on these facts under part 4 of article 159 of the Criminal Code of the Russian Federation (large scale fraud). Various material evidence, including computer equipment and documentation, was seized from their office,” a statement detailed.
The investigators have been able to establish that between November 2021 and May 2022, the suspects lured people who wanted to install their coin minting hardware in a mining hotel by offering renting and electricity prices that were far below the actual market rates.
They also urged the miners to hand over their equipment as quickly as possible, citing limited space for renting. The owners of the mining rigs were not informed of where their devices were going to be located and were only told that representatives of the hosting service had access to the mined coins.
Russian police are now looking for the fraudsters. Around 100 people have suffered losses from their actions when they gave the organizers of the mining hotel equipment valued at an estimated total of 100 million rubles, close to $1.9 million.
Due to its low electricity rates, starting at just $0.01 per kWh in rural areas, the region of Irkutsk has seen a spike in crypto mining, with farms often installed in basements and garages and powered by subsidized household electricity.
There have been reports that Russian media have revealed that plans with second-hand mining equipment from China, which cracked down on the industry in May 2021, have continued to arrive in the region this year, while cases of theft of mining hardware have been on the rise. Russia is planning to legalize crypto mining which is beneficial from its abundant energy resources and cool climate.