The Estonian National Criminal Police and the U.S. Federal Bureau of Investigation (FBI) arrested Sergei Potapenko and Ivan Turõgin, suspects related to a $575 million cryptocurrency fraud and money laundering case in a joint operation this week.
According to court documents, Potapenko and Turõgin, both 37, allegedly defrauded hundreds of thousands of victims through a multifaceted scheme.
They induced victims to enter into fraudulent equipment rental contracts with the defendants’ cryptocurrency mining service called HashFlare.
They also tricked victims into investing in a virtual currency bank called Polybius Bank. In reality, Polybius was never actually a bank, and never paid out the promised dividends.
Victims paid more than $575 million to Potapenko and Turõgin’s companies.
Source: ERR /Patrik Tamm
The pair then used shell companies to launder the fraud proceeds and to purchase real estate and luxury cars.
“The size and scope of the alleged scheme is truly astounding. These defendants capitalized on both the allure of cryptocurrency and the mystery surrounding cryptocurrency mining, to commit an enormous Ponzi scheme,” said U.S. Attorney Nick Brown for the Western District of Washington.
Oskar Gross, head of the Cybercrime Bureau of the National Criminal Police described the investigation as “long and vast”.
“The sheer scope of this investigation is testament to by the fact that this is one of the largest fraud cases we’ve ever had in Estonia,” he said in a statement released on Monday.
“At this point, we have reached the phase of the investigation where enough evidence has been collected in order to detain the suspects,” he added.
The Estonian police and FBI have collaborated since the beginning of the investigation.
The searches and arrests were during the course of the criminal investigation in the U.S. The joint operation involved more than 100 police officers, including around 15 federal agents from the U.S.
The U.S. agencies are now seeking the arrest and extradition of the suspects to the USA.
VES/ERR News
