Deputies are concerned about the risks of fraud in venture capital financing

On 10 February, during a meeting of the Jogorku Kenesh Committee on Budget and Fiscal Policy, deputies expressed concern about the draft law on venture capital financing and possible risks to the Kyrgyz economy.

MP Dastan Bekeshev noted that with the increasing number of fraudulent schemes such as MCN Coin, TYV Coin, the proposed bill may create conditions for the emergence of new fraudulent schemes in the venture capital sector. He emphasised that despite the attractiveness of venture capital funding, 98% of investors in such projects lose money.

Jalyn Zhenaliev, Deputy Director of the National Agency for Investments under the President of the Kyrgyz Republic, replied that the return on investment in venture projects can be high, and investors can diversify risks by investing in several projects. There are safeguards, such as licensing and restrictions on advertising, he said.

However, Bekeshev expressed doubts, arguing that fraudsters could circumvent these mechanisms by using WhatsApp groups and the licence to create a false impression of legitimacy among citizens.

MP Elvira Surabaldieva also criticised the draft law, noting that Kyrgyzstan's reputation for investment could suffer due to existing fraudulent schemes resembling pyramid schemes. She warned that the law in its current form could facilitate money laundering and the creation of funds through which financial manipulation could be carried out.

The MP emphasised the need for strict regulation of the origin of capital in such funds to prevent possible financial crimes and protect the interests of foreign investors.