Two Estonian citizens arrested for alleged involvement in $575 million cryptocurrency fraud
"New technology has made it easier for bad actors to take advantage of innocent victims – both in the U.S. and abroad – in increasingly complex scams."
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The Department of Justice announced on Monday that two Estonian citizens were arrested on Sunday in Tallinn, Estonia on an 18-count indictment for alleged involvement in a $575 million cryptocurrency fraud and money laundering conspiracy.
The two men, Sergei Potapenko and Ivan Turõgin, both 37 years old, allegedly defrauded hundreds of thousands of people out of money by convincing victims to enter into fraudulent equipment rental contracts with the defendants' cryptocurrency mining service called HashFlare.
Potapenko and Turõgin also allegedly convinced victims to invest in a virtual currency bank called Polybius Bank, which was not an actual bank. The victims ended up paying $575 million to Potapenko's and Turõgin’s companies and the pair used shell companies to launder the fraud proceeds and to purchase real estate and luxury cars.
"New technology has made it easier for bad actors to take advantage of innocent victims – both in the U.S. and abroad – in increasingly complex scams," said Assistant Attorney General Kenneth A. Polite, Jr. of the Justice Department's Criminal Division, according to the DOJ press release. "The department is committed to preventing the public from losing more of their hard-earned money to these scams and will not allow these defendants, or others like them, to keep the fruits of their crimes."
The FBI is currently investigating the case.
"The FBI is committed to pursuing subjects across international boundaries who are utilizing increasingly complex schemes to defraud investors," said Assistant Director Luis Quesada of the FBI's Criminal Investigative Division, according to the DOJ report. "Victims in the U.S. and abroad invested into what they believed were sophisticated virtual asset ventures, but it was all part of a fraudulent scheme and thousands of victims were harmed as a result. The FBI thanks our national and international partners for their efforts throughout the investigation to help bring justice for the victims."