Two Estonian Citizens Arrested! A $575 Million Crypto Currency Scam Exposed

November 20, 2022, two Estonian were arrested for their alleged involvement in a series of cryptocurrency and money laundering scams. According to preliminary statistics, the scammers took $575 million from "hundreds of thousands of victims," while the suspects used their ill-gotten gains to buy real estate and luxury cars.

The arrests of the two Estonian citizens, Sergei Potapenko and Ivan Turõgin, both 37, were reportedly made in Tallinn, Estonia, following a joint investigation by U.S. and Estonian law enforcement authorities. The suspects are accused of defrauding hundreds of thousands of victims between December 2013 and August 2019, along with four other associates living in Estonia, Belarus, and Switzerland.

"The size and scope of the alleged scheme is truly astounding. " said U.S. Attorney Nick Brown for the Western District of Washington. "These defendants capitalized on both the allure of cryptocurrency, and the mystery surrounding cryptocurrency mining, to commit an enormous Ponzi scheme."

The amount involved is huge and there are many victims

The two individuals are known to have been running a series of scams through a fake cryptocurrency mining service called HashFlare, and a company called Polybius.  

Potapenko and Turõgin have signed contracts with customers that allow them to rent HashFlare's mining operations in exchange for cryptocurrency. HashFlare's website enables customers to see the amount of cryptocurrency their mining activity should generate. But in reality these cryptocurrency mining devices are not even mining at one percent of the rate promised by HashFlare. Over $550 million worth of HashFlare contracts were signed by customers around the world between 2015 and 2019. 

In May 2017, Potapenko and Turõgin invested in a company called Polybius, promising to set up a bank engaged in the business of cryptocurrency, dividing the profits of the company to investors, and raised at least $ 25 million with this plan. However, the bank has never been established, nor has it paid any dividends. 

According to the document, Potapenko and Turõgin are also charged with money laundering.

Currently, the FBI is investigating this case, and the two scammers have been charged with 16 counts of wire fraud and one count of conspiracy to commit money laundering. If convicted, the two men face up to 20 years in prison.