Two Estonian citizens were arrested in Tallinn for a $575 million cryptocurrency scam cryptocurrency scam in Tallinn. The US authorities arrested the individuals who were allegedly running the money laundering scam called the HashFlare.
On Monday, the US Justice Department revealed that the arrested duo, identified as Sergei Potapenko and Ivan Turygin, were behind the cryptocurrency fraud. According to the reports, Potapenko and Turõgin, both 37, lured victims into signing up for a fake cryptocurrency mining business called the HashFlare. The alleged defrauded thousands of users using a multi-faceted cryptocurrency scheme.
The scammers were allegedly using shell companies to buy real estate and luxury cars to re-invest the scammed money again. According to the Justice Department, the individuals were also luring victims to invest in a fake virtual currency called the Polybius Bank. The investors never got paid after investing in the currency, and the total amount paid by the investors went as high as $575 million, the reports stated.
Cryptocurrency fraud: Two Estonian citizens arrested
The Western District of the northwestern U.S. state of Washington initiated the indictment by a grand jury on 27 October 2022 and unsealed it on Monday. The “Size and scope of the alleged scheme is truly astounding,” said Assistant Attorney General Kenneth Polite Jr of the Justice Department’s criminal division. The authorities detained the alleged scammers after the order for the arrest was passed by the court.
The U.S. and Estonian authorities are working together to seize the assets of Sergei Potapenko and Ivan Turygin and restrain them from using the profits they earned via these crypto scams. According to the reports, the FBI also probed the case involving at least 75 real estate properties, six luxury vehicles, and several cryptocurrency wallets.
“Ultimately, their elaborate Ponzi scheme fell apart, and they conspired to conceal and launder the money which they took from the victims of their scheme. The FBI and U.S. law authorities were able to track down the scammers via a flaw in their strategy. Thanks to our partnership with the Estonian authorities, the two defendants will answer for the massive fraud they are accused of perpetrating,” said Richard A. Collodi, Special Agent in Charge of the FBI’s Seattle field office.
Moreover, HashFlare didn’t provide the crypto mining equipment it promised to its customers. Upon further digging, it was discovered that less than 1% of the supposed computational capacity was used to mine Bitcoin. The alleged scammers could not provide the promised payments with their mining rig systems, forcing the investors to withdraw their mining proceeds, ultimately closing the venture in 2019.
Sergei Potapenko and Ivan Turygin detained in Tallinn
The scamming duo is now being detailed in Tallinn and will appear in court for pending extradition to the U.S. The alleged scammers are charged with 16 counts of wire fraud, 1 for conspiracy to commit money laundering and 1 for conspiracy to commit wire fraud. According to U.S. state laws, each of these crimes has a maximum sentence of up to 20 years in jail.
The FBI is investigating the case along with the Cybercrime Bureau of the National Criminal Police of the Estonian Police and Border Guard, who supported the U.S. law authorities in catching the criminals in the state of the Republic of Estonia. Individuals who were victimized by this scam, related to the fraud, or lost funds due to the scam can visit www.fbi.gov/hashflare for more information.