The head of a Russian government ministry has cautioned against cryptocurrency investments by comparing bitcoin price ’ to that of ‘MMM’, a former Russian ponzi scheme.
In public comments last week, Russia’s Minister of Economic Development Maxim Oreshkin urged everyday investors to be wary of investing in cryptocurrencies, particularly bitcoin.
In statements reported by regional news source RIA, Oreshkin stated:
The fact that we see, for example with bitcoin, the publicity that goes around with the topic is dangerous for the involvement of citizens who are not qualified investors. [This is] because if we look at the dynamics of bitcoin valuations, it is very similar to the dynamics of the values of MMM shares.
Founded in the early 1990s, MMM was a Russian company that snowballed into becoming one of the world’s largest Ponzi schemes of all time. Varying estimates peg anywhere between 5 to 40 million victims of the ponzi scheme who are said to have lost upwards of $10 billion. Law enforcement officials arrested the founder Sergey Mavrodi and shut down the scheme in 2003. However, the ponzi has since resurfaced in 2011 under the banner ‘MMM Global’ with a particularly high presence in several African countries including Nigeria and South Africa.
“There are very high risks for those who invest in it as it’s clear the state will not be able to protect these people – they act absolutely at their own risk,” Oreshkin added.
The minister concluded by stating:
“I simply call on everyone to be very careful about such investments.”
Oreshkin’s comments are fundamentally questioning the value of digital currencies rather than their legitimacy. The official professed similar concerns earlier in September during a televised interview.
“I think that this topic should now be treated very carefully: it has become very popular, popularity attracts attention, attention drives speculative demand,” Oreshkin stated at the time.
“We see that the volatility that exists here is tens of percent in one direction, tens of percent in the other direction, which is in fact bad for this instrument.”
For the Minister of Economic Development, it’s a matter of ensuring stability in value for a digital currency to work as a method of payment. Oreshkin’s comments come at a time when other Russian officials are warming to the reality of adoption of cryptocurrencies in society.
Earlier in September, Russia’s finance minister Anton Siluanov stated:
“The state understands indeed that cryptocurrencies are real. There is no sense in banning them, there is a need to regulate them.”