On July 3, the Tverskoy District Court sentenced Krasnodar crypto artist Sergei Galanter. The creator of a financial pyramid disguised as investments in erotic NFT paintings received seven years in a general-regime penal colony and a fine of 1 million rubles. Under the guise of high-yield investments in digital art, the defendant attracted over 200 investors, collecting about $6 million.
The promised payments to project participants never materialized. Notably, the punishment was significantly harsher than the prosecutor's request, who had insisted on six years of imprisonment and a fine of 500,000 rubles.
How the Scheme Worked
Law enforcement arrested Galanter in December 2023. Calling himself an investor in the metaverse, the man promised clients colossal returns. Citizens were offered to invest cryptocurrency in erotic NFT paintings he created. At the same time, the organizer willingly accepted cash in envelopes. The minimum transfer amount was 500,000 rubles, and the largest single contribution reached $500,000.
Hype on social media helped attract gullible investors. The artist's wife, popular blogger Maria Afonina, organized an active advertising campaign. The spouse regularly portrayed her husband as a brilliant and financially responsible person. Followers brought their savings, inspired by the luxurious lifestyle showcased on the accounts.
Galanter spent the lion's share of the collected funds on personal needs. A smaller portion of the money was transferred to early investors to create the illusion of real income. To date, the criminal case includes 31 proven episodes of fraud.
Under intense pressure from victims and the press, the project's creator acknowledged a debt of $6 million. He publicly promised to pay 580 million rubles monthly through the sale of his art. However, the defendant categorically denied guilt under the criminal article, calling the project's collapse a simple cash flow gap.
The Sentence Was Severe
Judge Alexei Krivoruchko decided to impose a term harsher than what the state prosecution proposed. Experienced lawyers emphasize that courts very rarely exceed the punishment requested by the prosecutor's office. However, in this particular case, the defendant's actions were deemed to pose an increased public danger.
The implemented scheme had all the classic signs of a financial pyramid. Despite obvious evidence, Galanter stubbornly continued to deny guilt even under investigation. The project's author did not consider his personal activities to be illegal fraud until the very end. According to independent experts, with a maximum threshold of ten years, the seven years imposed do not seem excessive. The court fairly took into account the enormous scale and systematic nature of the crimes committed.
Actual compensation for damages could have mitigated the final decision of the court. By the time of the final hearing, the victims had not received any compensation, despite past promises. Additionally, the court fully granted large civil lawsuits from the victims. Currently, the defense categorically disagrees with the verdict and intends to appeal the decision.
As an analyst, I note that this case is a stark reminder of the risks associated with investments in opaque NFT projects promising super-profits. The crypto industry continues to attract fraudsters who disguise pyramids as innovations. Investors should exercise maximum caution and verify the reputation of creators, rather than blindly trusting hype on social media.