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Kazakhstan prohibits Ponzi schemes

15 january 2014, 10:32
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Photo courtesy of wordpress.com
Photo courtesy of wordpress.com
Kazakhstan has prohibited Ponzi schemes, Tengrinews reports.

Kazakhstan’s President Nursultan Nazarbayev has signed a law to counteract Ponzi schemes, according to his Press Service. This law has introduced an article into the country’s Criminal Code to set liability for those caught building Ponzi schemes.

In line with the definition offered by the US Securities and Exchange Commission, a Ponzi scheme is an investment fraud that involves payment of purported returns to existing investors from funds contributed by new investors. Ponzi scheme organizers often solicit new investors by promising to invest funds in opportunities claimed to generate high returns with little or no risk. In many Ponzi schemes, the fraudsters focus on attracting new money to make promised payments to earlier-stage investors to create the false appearance that investors are profiting from a legitimate business.

The new legislation introduces 7-12-year-long prison terms for those arranging ponzi schemes and bans any advertising of such schemes.

According to the country’s General Prosecutor’s Office, from 2010 to 2013 there were a total of 61 criminal cases related to Ponzi schemes initiated across Kazakhstan, with the overall number of victims standing at 4000 people. Their losses made up $ 5 million.

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