Kazakhstani bloggers, Meirzhan Turebayev, Meirkhan Sherniyazov, and Azizjan Saidbayev (from right to left), in the commercial of the pyramid scheme Mudarabah Capital. Screenshot from Atameken Business News YouTube channel. Fair use. On June 23, a court in Kazakhstan concluded the closely followed case of the Mudarabah Capital, ACD Technology, and Astex.kz pyramid schemes and sentenced 12 people to lengthy prison sentences ranging from five to 14 years. The case was closely followed by the public because two of the defendants, Meirzhan Turebayev and Meirkhan Sherniyazov, are famous actors and bloggers with several million followers on Instagram. The court found them guilty of establishing and running Mudarabah Capital and sentenced them to five years in a minimum security prison. Both of them pleaded not guilty, stating they only advertised the company and lost the money they had invested in it. The case was launched in January 2022. In February of the same year, the authorities accused Torebaev, Sherniyazov and another Instagram blogger Azizjan Saidbayev, who still remains on the wanted list, of establishing and running a pyramid scheme, which they all advertised on their Instagram accounts. Mudarabah Capital was advertised as an Islamic financial institution and promised 240 percent annual returns on investments. Two hundred people transferred around KZT 8.6 billion (USD 18.61 million) to the accounts of Astex.kz through its affiliate Mudarabah Capital. In April 2022, a woman set herself on fire in front of the building of the Ministry of Interior in Kazakhstan’s capital Astana, after her family had lost KZT 20 million (USD 43,800) invested in Mudarabah Capital. The verdict has left people in Kazakhstan divided. Some view it as a just and fair decision, which will force bloggers to be more attentive to what they advertise and prevent them from influencing people into questionable investment choices. Others see it as excessive and unfair, since bloggers are not responsible for issuing licenses to such companies and monitoring financial markets. What is clear is that the verdict will affect the country’s budding social media landscape and hundreds of thousands of bloggers who make a living from advertisements on Instagram. The history of the three pyramid schemes dates back to early 2019, when the alleged mastermind behind the whole operation, Almas Kurmangaliev, established the LLP ACD Technology. It was registered to his relative Erzhan Mansurov, who became the director of the company. Its declared area of activity was the production of computers. Soon after, the company started accepting investments with the promised payment of dividends of 20 percent of the deposited amount within 32 days (240 percent per year). According to the investigation, the total damage caused to the investors amounted to about KZT two billion (USD 4.48 million). In November 2019, Kurmangaliev established another pyramid scheme, LLP Astex.kz and registered it to another relative, Erlan Mansurov. Its operation and dividend promises were similar to that of ACD Technology. The only difference was that Astex.kz specialized in making profits by bidding in government tenders. The total damage to the investors was estimated at KZT 1.2 billion (USD 2.63 million). To promote investments, both companies promised financial awards to those who attracted new investors — 10 percent from the invested amount. In 2020, Kurmangaliev established the LLP Mudarabah Capital, positioned as a financial institution that allegedly “conforms to all the canons of Islam,” a feature that instilled trust in people. It was promoted through extensive advertising in social media networks with the participation of well-known bloggers, actors and other public figures. Similarly to Astex.kz, the company promised huge returns to investors by winning public tenders. Turebayev and Sherniyazov were listed among founders of Mudarabah Capital in the company’s documents. In October 2021, the authorities arrested several individuals in relation to running the company. In February 2022, they were accused of establishing and running a pyramid scheme, and were taken into custody in April 2022. Here is an adverstisement of Mudarabah Capital published on Meirkhan Sherniyazov's YouTube channel. Pyramid schemes are widespread in Kazakhstan. Between January and November 2022, the total damage from them was KZT 8.1 billion (USD 17.7 million). Only four percent of this amount was returned to investors, meaning they lost almost all their invested money. The Mudarabah Capital case was the most publicized one due to the involvement of famous bloggers and actors in its advertisement campaign. It prompted the government to take major legal steps to counter their advertisement.