Two People Charged In Estonia For Alleged Involvement In $575M Crypto Scam

Two Estonian nationals were arrested for running a Ponzi scheme and laundering money stolen through crypto fraud by using shell businesses.

Two Estonian nationals in Tallinn have been arrested for running a multi-tiered plan to launder money stolen through crypto fraud by using shell businesses. The action is made by the U.S. Department of Justice. The overall cost of the accusation is $575 million and includes 18 counts.

HashFlare, a cryptocurrency mining business, was a Ponzi scheme run by Sergei Potapenko and Ivan Turgin, both 37, who created false crypto mining equipment-rental contracts. They deceived victims into investing in a cryptocurrency bank named Polybius Bank that never paid out dividends.

According to the evidence presented in court, hundreds of thousands of people fell for the scams. The statement claims that 75 properties, six splendor automobiles, and thousands of crypto mining machines were involved in the money laundering conspiracy.

HashFlare supposedly made $550 million in profits between 2015 and 2019. It appears that the crypto mining hardware firm was mining bitcoin at a rate of less than one percent of the computer power it promised. In 2017, the defendants launched Polybius and quickly generated $25 million, all of which was transferred to various bank accounts and cryptocurrency wallets they controlled.

DoJ’s Take On The Crypto Mining Scam

As per the Justice Department, Turõgin and Potapenko were charged with “conspiracy to commit wire fraud, 16 counts of wire fraud, and one count of conspiracy to commit money laundering,” and were arrested. The crypto scam has been turned up to the FBI.

Moreover, two decades in jail could be in store for the accused partners. A judge in a federal district court will make a determination.

Assistant Attorney General Kenneth A. Polite, Jr. from the Criminal Division in the Department of Justice commented on the situation:

“They tried to hide their ill-gotten gains in Estonian properties, luxury cars, and bank accounts and virtual currency wallets around the world,” he added:  “U.S. and Estonian authorities are working to seize and restrain these assets and take the profit out of these crimes.”

Notably, in October this year, multiple attacks were made on digital asset markets, and a hacker known as “Monkey Drainer” caused a lot of trouble for crypto enthusiasts.