Financial Pyramid Research Articles

Criminal Legal Measures to Counteract the Activities of Financial Pyramids in the Republic of Kazakhstan

The purpose of this study is to examine ways to counteract the activities of financial pyramids. To achieve this purpose, the study employs methods such as logical analysis, formal-legal analysis, dogmatic analysis, legal hermeneutics, deduction, induction. The study defines the concept of a “financial pyramid,” identifies its characteristics, signs, implementation principles, role, and influence on the socio-economic life of the state. Statistical data from the Republic of Kazakhstan were analysed, leading to the conclusion that the number of criminal activities in this category increases annually. Moreover, regions where these illegal activities are most prevalent were identified. In this regard, an analysis of Kazakhstan’s legislative framework was conducted, specifically the Criminal Code of 1997 and 2014, highlighting key problematic aspects and normative-legal conflicts. A comparative legal analysis was also conducted, comparing the experiences of countries such as the USA, Poland, Germany, among others.

Веб-сверхдержава

In the context of the intensive development of information technologies and the gradual transfer of various functions of the state online (remember the same portal “Gosuslugi”), as well as numerous virtual environments in which real people interact through their avatars with the avatars of other people, sooner or later projects should appear, seeking to create from such a virtual reality a certain structure with the features of the state. The first more or less significant attempt against this background was the creation of the “decenturion blockchain state”, which has ceased to exist today and is considered by many no longer as a visionary attempt to create a new subject of law, but as a somewhat specific, but well-known “financial pyramid”. However, we should expect that in the future we will see some more attempts to create quasi-state formations in the virtual world, some of which will probably be able to gain some weight in the real world. The article discusses the criteria that make it possible to attribute the state to the number of superpowers and the fundamental possibility of the appearance in the 21st century on the Internet of an education that identifies itself as a state and meets the criteria of a superpower.

Aphasia or Scientific Revolution? (Discourses of Soviet Marxist and non-Marxist Economists in the 1980–1990s)

The change of discourse among Soviet economists preceded the change in the social structure of the USSR. Due to these changes, there appeared a number of socio-economic phenomena that could not be described in terms previously known to economists of the time. This led to a painful disorder of the collective cognitive structure shared by Russian economists – aphasia. The changes that took place in the economy of the country could not be described in Marxist terms of progress: the latter did not allow the «restoration of capitalism» after many years of «mature socialism» domination. At the same time, barter, non-payments, and the financial pyramid built by the state did not fit into the liberal discourse either. The main force behind the delegitimization and destruction of the Soviet social order was the Marxists. They defined the phenomena they observed as «non-socialist», which led them to the conclusion that the bureaucracy and the nomenklatura dominated the USSR. From the ugly pseudo-socialist state, they suggested moving towards «true socialism». But the democratic transformations they proposed largely coincided with those that figured in the official authoritative Marxist discourse. Against this background the gradual transition to the dominance of the liberal economic discourse is quite natural. However, at the first stage of the political confrontation the calls for economic liberalization were accompanied by the sympathy of domestic liberals for authoritarianism A. Pinochet, which could not but cause their subsequent discredit. Nevertheless, after 1998 there was a rapid period of «normalization» of the discussion. Liberal discourse becomes the main one and acquires respectability, both in politicians’ discussions (including the communists) and in the academic environment. The discourse of Yu.V. Yaremenko made it possible to see the structural imbalance of the Soviet economy. Under these conditions, the transition to the market «cut off» most of the non-competitive industries leading to the fact that Russia was among the poor countries. The decisions to release prices and launch a decentralized mechanism for bank lending to investments were necessary to eliminate the main structural imbalances. This approach has been relegated to the periphery of economic discussions. The interpretation of the transition of speech practices from Marxism to the modern economic mainstream as a scientific revolution is a retrospective rationalization of the catastrophe that occurred. The period during which most of the judgments of Russian economists were poorly correlated with the observed phenomena. Most works of that time are now forgotten. The author characterizes now forgotten ways of discussing economic phenomena as aphasia.

A Model of Financial Pyramid with Quasi-Rational Participants

A model of a financial pyramid is proposed in which each participant makes a decision about entering and exiting the pyramid based on the maximin principle using his (or her) ideas about the characteristics of other participants. If the pyramid organizers are able to carry out the whole process quickly enough (so that the payoffs to agents who participated in the pyramid and left it in time do not matter too much), then exactly those agents who overestimated the share of losers in the total mass of agents will lose.

A Model of Financial Pyramid with Quasi-Rational Participants

A Model of Financial Pyramid with Quasi-Rational Participants

The Fraudulent Phenomenon of the Financial Pyramids in the Financial Industry

The purpose of the article is to present the fraudulent behaviour observable in the financial industry, which is the financial pyramid phenomena, through a detailed description of such occurrences together with the damage and consequences generated. This paper will include a solid piece of knowledge about this behaviour, and will also distinguish the similarities and differences between financial pyramids. Methodology of this paper is the critical analysis of the literature and comparative analysis of selected pyramids according to the criteria to compare and distinguish similarities and differences. Results of the research confirm that the phenomenon of the financial pyramids is very harmful to the financial industry but also to the participants and society as a whole. The losses generate every year are enormous, but on the other hand, there is suffering of the victims as well. To conclude, the financial pyramids are inseparable elements of the financial industry and moreover, they are very dangerous and destructive. The knowledge of the specificity of pyramids increases the safety of financial consumers in the financial market.

Personal financial literacy among Indian postgraduate residents.

Background Postgraduate residents' ability to understand and effectively manage their finances is variable. We conducted this study to assess the awareness of personal financial literacy among Indian residents. Methods We circulated a web-based cross-sectional Google Forms multiple-choice questionnaire having questions in three categories including financial awareness, current financial status and plans among 400 Indian residents. Results A total of 215 Indian residents (53.75%) responded to the survey (men 80.9%, unmarried 74.4% and pursuing broad specialties 83.3%). The majority were unaware of stocks, special student/doctor loans, tax planning, life insurance, professional indemnity and tax/financial planning. The majority opined that personal finance and investing should be taught at medical school/residency. A financial pyramid based on the hierarchy of needs is proposed. Conclusion Lack of financial literacy and planning was seen among the majority of Indian residents. Our study highlights this gap in the medical curriculum and the need for formal structured financial education during training.

Тактика и приемы психологического воздействия, применяемые для завлечения граждан в деятельность «финансовых пирамид» и нелегальных форекс-дилеров

This article reveals the concept of a «fi nancial pyramid». Methods and techniques of psychological infl uence on potential participants of «fi nancial pyramids» and investors of pseudo-brokerage companies are considered. An approximate tactic used by fraudsters to attract citizens’ funds is described. The author considers measures to prevent fraud committed under the guise of investments.

ECONOMIC ASPECTS OF CRYPTOCURRENCY MINING

Introduction. Economic development of Ukraine in the third decade of the 21st century largely depends on the development of digital technologies, on which the cryptocurrency busi­ness directly depends. According to the Index proposed by chainalysis.com, Ukraine is one of the leaders in the world and the undisputed leader in Europe in the adoption of cryptocurrencies. This became possible thanks to the active development of financial and information technol­ogies in Ukraine, and the financial, economic and military-political crises only give additional impetus to the development of the cryptocurrency business due to its global nature and full or indirect independence from attempts at state regulation. One of the areas of cryptocurrency business development is cryptocurrency mining. The purpose of the article is to reveal the algorithm of conducting business in the field of cryptocurrency mining and the economic efficiency of mining in Ukraine and the possibility of its impact on economic growth in the country. Results. Cryptocurrency mining is the process of creating cryptocurrency coins. It has been investigated that the cryptocurrency mining process is not a financial pyramid or some kind of virtual game, but is one of the newest types of business activity, which requires significant the­oretical and practical economic and technical knowledge, is economically expedient both in the short and long term. When mining, you can use a variety of computer equipment, depending on the miner’s economic tasks and desired results. ASIC equipment has been developed for mining on an industrial scale. Cloud mining is used for investing. If there is no knowledge about mining and limited financial resources, you should use browser mining or mine on your own PC, laptop or smartphone. However, the most efficient and widespread mining takes place on video cards. It was found to be a by-product of mining. It is estimated that there is a slight correlation between the earnings of miners on the Ethermine mining pool and the daily mining profit. Conclusions. Although the history of cryptocurrency business is only one and a half decades, mining, as an object of business activity in Ukraine, is a significant economically effective type of business activity, which is noted in the world rating of the perception of cryptocurrencies, according to which Ukraine is one of the world leaders. Attempts to implement legal regulation of cryptocurren­cy mining both in Ukraine and in other countries, and its gradual implementation do not significantly harm the creation, distribution and use of cryptocurrency coins, however, will create transformed conditions for the economic attractiveness of cryptocurrency mining as business objects.

Cryptocurrency as a payment agent

The paper examines the essence of cryptocurrency as a method of payment has been investigated and identifies its key features (exchange for goods or services; exchange for classic currency; payment for goods and services; minimum level of possibility of abduction; payments, fast and direct transactions; investment asset; business development in cryptocurrency). Different approaches to determining the legal nature of cryptocurrency are analyzed (cryptocurrency as a method of payment; cryptocurrency as a foreign currency; cryptocurrency as a financial asset; cryptocurrency as a financial pyramid). The conclusions of the EU court, the courts of the national system on the use of cryptocurrency as a means of payment are analyzed. The legal nature of cryptocurrency is determined through the prism of world practices of its use. The possibility of using cryptocurrencies in terms of their ability to perform the basic functions of money is analyzed. The paper examines two attempts of legislators to regulate the issues of taxation, legal nature and legal regulation of cryptocurrency in 2019 and 2020. Attention is also paid to the relevant institutions where you can pay with cryptocurrencies, namely: “Spendabit”, “CoinATMRadar”, exchange office in online networks – WebMoney. According to the National Bank of Ukraine, the danger of cryptocurrency transactions is indicated. Examples of the main risks associated with the purchase, sale, exchange and conversion of cryptocurrencies are given (possibility of loss of funds due to theft, possibility of fraud, lack of infrastructure, significant price fluctuations of cryptocurrencies, lack of guarantees for return of invested funds in cryptocurrencies). In conclusion, attention is drawn to the need for legislative regulation of the essence of cryptocurrency for further effective evolution.

Fraudulent Schemes in the Financial Market (Financial Pyramids) – Detection and Prevention

This contribution deals with fraudulent schemes in the financial market. The main aim of the contribution is to provide main identifying features of fraudulent practices that prove to be a financial pyramid. The author summarizes in one place numerous features that indicate the financial pyramid (Ponzi scheme), especially operating on the financial or capital market. He concludes, the state of play of legislation regarding the features is insufficient. The hypothesis to confirm or disprove is there is no uniform legal provision covering all features of the pyramid scheme in Slovakia, the relevant legislation is limited to the prohibition of certain practices, which a priori may not constitute a pyramid scheme.

ЭКОНОМИЧЕСКАЯ МОДЕЛЬ ФОРМИРОВАНИЯ РИСКОВ В ФИНАНСОВОЙ ПИРАМИДЕ

The article is devoted to the urgent problem of preventing financial losses and risks associated with fraudulent actions of third parties. An analysis of various circumstances and situations of fraudulent actions is given. A comparative analysis of various schemes and algorithms used in the construction of financial pyra-mids has been carried out. The importance and necessity of informational and methodological warning of the population about possible risks are shown: on the street, in an apartment, by phone and on the Internet, at home (uninvited guest), in the market, in a store, in transport, at a train station, in the press, with bank cards (phishing, skimming, phantom ATM). The economic recommendations for preventing financial losses for the affected citizens are presented. Particular attention is paid to the concept of building financial pyramids. An economic model of risk formation has been developed using the example of the famous MMM financial pyra-mid. The calculation of the moment when the depositor exits the fraudulent scheme without financial losses and, importantly, with a profit, has been performed.

The effect of microinsurance on the insurance market: evidence from Taiwan

Microinsurance is one of the fastest growing new markets for the billions at the bottom of the financial pyramid – low-income customers previously precluded from traditional insurance. Will insurers really benefit from serving a larger amount of customers? This paper attempts to provide answers by examining the performance of life insurers in Taiwan. Our results show that microinsurance dummy variables are negatively related to efficiency scores and premium income in both OLS and Tobit models. Providing microinsurance products will increase competition between micro and traditional insurance products and reduce market demand for traditional insurance. The efficiency and premium income of traditional insurers will decrease if the price of microinsurance is regulated at marginal cost.

Cryptocurrencies and Blockchain: Potential Applications in Government and Business

ABSTRACT Cryptocurrencies and distributed registers (blockchains) have recently attracted increased interest among specialists from the widest variety of fields. In turn, the public has generated a pool of regularly asked questions, which have not yet been answered thoroughly. This article provides lines of reasoning with regard to several popular questions linked to this subject. It also addresses issues such as the creation of national cryptocurrencies and use of blockchain technology by businesses and governments. In addition, it analyzes the opinion that cryptocurrencies are a financial pyramid. Finally, it briefly examines the configuration of Bitcoin’s distributed register and looks at how this register could be affected by the hypothetical creation of a quantum computer.

SOCIO-ECONOMIC MOTIVATIONS FOR PARTICIPATION IN FINANCIAL FRAUD IN THE INSURANCE SERVICES MARKET

Introduction. The issue of financial fraud, in particular in the market of insurance services and the motives for participation in them by individual participants who are able to recognize a possible financial pyramid and refuse to participate in it is especially relevant at the present stage of development of Ukrainian society. In developed countries, the problems of involvement and motives for participation in financial pyramids are paid much more attention than in Ukraine, where a potential consumer of a financial product is often left alone with the problem after the closure of a fraudulent project. Methods. The methodological basis of the article is a dialectical-materialist approach, and during the research special general scientific methods were used: analysis and synthesis - in determining the motives of participation and relationships of participants in the financial pyramid; historical and legal - in disclosing the experience and consequences of the spread of fraud, in particular on the example of Albania. Results. The article attempts to assess the factors that affect the relatively conscious participation of consumers in financial projects, with clear signs of a financial pyramid. We interpret the financial pyramid as: "the activity of the enterprise of the financial sphere, which is to accept funds for investment with a high level of return (at least at the level of declaration); however, this goal is not realized at all or to a sufficient extent, which causes a spiral of losses." We single out the motives for involvement in the structures, which during the operation of the payment of liabilities are made from the current investments of new clients (investors or partners) and the factors that determine the involvement in such structures of colleagues, family, friends and acquaintances and their financial resources. Discussion. Aggressive marketing, which declares extraordinary profits, so large that their size precludes rational thinking and awareness of the fairness of distribution or financial enrichment, in the representation of celebrities who authenticate the proposed obligations in combination with the level of regulation and financial literacy significant prospects for further research on this topic. This situation allows us to predict a significant number of new participants in financial pyramids and exacerbation of financial fraud. Keywords: insurance, financial pyramid, fraud, motives, factors.

Принципи фінансової стійкості інвестиційних фондів

The purpose of this work is to substantiate the principles of financial stability of investment funds, which are inverse (opposite) to the principles of creating financial pyramids. The elements of scientific novelty include the specification of the peculiarities of compliance with the principles of financial stability of investment funds in modern conditions in Ukraine. An investment fund is also a kind of financial pyramid, but it can be created on the basis of the principles of stability, which are the opposite of the rules of existence of fraudulent financial pyramids. The such principles are defined as: dominance of assets over liabilities and minimization of overhead costs (including advertising); income from assets must exceed the value of liabilities; use of financial leverage or formation of assets according to a certain rule, which cannot be achieved by an individual investor; transparency and controlThe economic reasons for the existence of investment funds are considered, and the reasons for the success of individual financial institutions, which are essentially the relevant funds: Vanguard S&P 500 ETF and Berkshire Hathaway, are analyzed. The structure of the balance sheet of the investment fund is determined, which allows to adhere to certain principles of financial stability and use financial leverage. It is specified that an individual investor (individual) cannot use financial leverage for investment activities in the stock market, as it cannot issue bonds. The use of borrowed funds (broker or bank loans) allows an individual investor to make only short-term speculations that are very risky. At best, the average individual investor will only succeed in reaching the level of the S&P 500 stock index, while the investment fund will be able to exceed this index through the use of financial leverage.

Investigation of a Mathematical Model Linking GDP Growth with Changes in National Debt

The article proposes a mathematical model linking GDP growth with changes in national debt. The model is based on a system of two linear ordinary differential equations. The rate of GDP growth is defined in the model as the difference between aggregate revenues and aggregate expenses, including debt service expenses. Possible types of GDP and national debt dynamics are investigated as a function of parameters. External investments increasing national debt may accelerate economic growth, whereas without new external loans GDP either does not grow or grows slowly. An equation describing the variation of relative external debt has been derived and fully investigated. It is shown that the external debt is never fully repaid, which is consistent with other models. Conditions of stable economic growth are derived, when GDP grows faster than or at the same rate as national debt, whereas the relative debt approaches a constant value. We investigate conditions that preclude a Ponzi game, so that a country cannot use new external debt to build a financial pyramid to repay old debt. The model features are demonstrated in application to statistical data from a number of countries. The model parameters are determined and growth trajectories are calculated for GDP and national debt.

Sociological analysis of the financial pyramid in Kazakhstan: signs and consequences

The article presents a theoretical and practical analysis of the structure of investments, on the example of a financial pyramid as a widespread phenomenon in  the  economy of  Kazakhstan, as well as the signs and consequences associated with its creation. It also analyzes the causes and consequences of human offenses, with a clear indication of the signs of financial posts. The article examines the problem of financial pyramids as one of the areas of shadow economic activity. The main regularities and institutional innovations in the field of “financial pyramid construction” are considered. The possibility of  forming an  altered state of  consciousness for  potential participants  of financial pyramids used for criminal purposes is argued. Based on the study of sociological and economic literature on this topic, an assessment tool has been developed in the form of an electronic questionnaire of the online survey service “SurveyMonkey” for determining public opinion about the financial pyramid. The study determined the level of financial literacy of people and identified its individual categories, the most susceptible to fraudulent schemes of financial pyramids. The study applied methods of statistical analysis, developed on the basis of the analysis of quantitative and categorical indicators. In general, the level of transparency of keywords used and associated with “financial pyramids” is empirically determined and the organizational structure of the most common operating financial schemes is shown.

Legal Regulation of Equity Construction: Shortcomings Determining Some Types of Economic Crimes

There are various types of unlawful, including criminal, behavior in the sphere of construction, but the lawmakers have reduced them all to «defrauding shareholders». The growth in the number of such offences is directly connected with the shortcomings in the system of subcontractor bidding, the legislation on self-regulating organizations and the general economic climate for developers. The authors conclude that «defrauded shareholders» are the result of failed financial pyramid schemes devised by developers to compensate for insufficient funds and expensive bank loans. The lawmakers should take into account not only the position of shareholders, but also the position of developers who need a cheap loan, while amendments to legislation set various limits to means available to them. Calculations show that a bank loan with a 5 % interest automatically eliminates most problems, but this solution is outside the industrys control. At present, a developer can only obtain a loan for project funding if the full project documentation is ready, the construction permit has been obtained and at least 30 % of the total amount has already been invested in the site. Most developers cannot meet these requirements. To summarize, there should be adequate punishment for offenders in the sphere of real estate (imposition of fines proportionate to the public danger of the action). At the same time, administrative liability is incurred if the actions of a person do not constitute a criminal offense. Administrative liability is less repressive than the criminal one, which is evident from the comparative analysis of administrative and criminal punishments and the type of deprivations and encumbrances that they entail. The future of equity construction depends not only on criminal or administrative legislation, but on the economic climate in Russia and the complex financial and legal measures aimed at protecting defrauded shareholders.

MODERN TECHNOLOGIES OF ACQUISITION OF FUNDS OF CITIZENS BY THE FINANCIAL PYRAMID

The purpose of the article is to study the criminalistics of the use of the most common technologies of acquisition of funds of citizens, done by the way of the financial pyramid. The subject of the study is the content of criminal technology of fraudulent way of the financial pyramid. Methodology. The research is based on the use of general scientific and special-scientific methods and methods of scientific knowledge. The historical-legal method allowed determining the genesis of the concepts of “technology of criminal activity” and “financial pyramid”, as well as the formation of scientific and theoretical views on problems and methods of combating them. The comparative legal method was used to compare the doctrinal approaches of legislative regulation to counteract fraud committed by the method of the financial pyramid. The system-structural method contributed to the awareness of the technologies of preparing, committing, and concealing the fraud. The methods of grouping and classification were the basis for the author’s approach to the differentiation of technologies for the acquisition of funds of citizens, depending on the organizational and legal form, under the cover of which a financial pyramid was created. The statistical method is used in the analysis of investigative and judicial practice for ten years. The results of the study showed that the method of financial pyramid used for committing fraud is fully structured and includes criminal technologies for preparing, committing, and concealing the fraud. The combination of separate technologies in the mechanism of the crime is aimed at masking the active phase of criminal activity under civil-law relations, which complicates the timely detection of the signs of the crime both by the victim and by law enforcement agencies. Practical implications. The research carried out the typing of fraudulent techniques using the financial pyramid method, which is the basis for developing and improving methods of disclosure and investigation of crimes. Value/ originality. On the basis of the proposed author’s approach to the differentiation of technologies of criminal activity, it is possible to predict the emergence of the new ways of committing fraud in the financial sector.