Key Takeaways:
- In Tallinn, two Estonian nationals were detained on suspicion of running a $575 million cryptocurrency fraud scheme.
- A crypto Pyramid scheme is accused of defrauding hundreds of thousands of victims by Sergei Potapenko and Ivan Turgin, both 37.
According to an 18-count indictment, two Estonian citizens were detained in Tallinn, Estonia, for their purported roles in a $575 million cryptocurrency fraud and money laundering conspiracy, the U.S. Justice Department announced on Monday.
The indictment claims that Ivan Turgin and Sergei Potapenko, both 37, used a cryptocurrency Ponzi scheme to defraud hundreds of thousands of people. The pair bought homes and expensive cars with the money they received from their fraudulent activity by using shell companies to launder it.
Their first business, HashCoins, which debuted in December 2013, claimed to be a cryptocurrency mining hardware producer and accepted orders (along with full payment from customers) for miners. However, the indictment claims that HashCoins never produced anything; rather, it resold mining equipment that was bought on the open market and looked for excuses to put off the shipment of the vast majority of its sales.
HashFlare is accused of deceiving investors about the cryptocurrency mining hardware it used while operating at a much slower rate. Then Potapenko and Turgin neglected to pay investors. Between 2015 and 2019, the investors signed false contracts with HashFlare.
The defendants either refused to pay the investors when they requested to withdraw their mining proceeds or in some cases, they settled the accounts by using virtual currency that had been bought on the open market.
The claimed plan’s size and scope are truly astounding. “These defendants engaged in a massive Ponzi scheme by leveraging the allure of cryptocurrencies as well as the mystery surrounding cryptocurrency mining,” said U.S. Attorney Nick Brown for the Western District of Washington. “They used money from later investors to pay off early investors after luring investors with false promises.
They made an effort to conceal their illicit wealth by purchasing expensive cars, homes in Estonia, bank accounts, and virtual wallets worldwide. Authorities in the United States and Estonia are working to seize and repress these assets and remove the proceeds from these crimes.
The department, which claimed the case was under investigation by the FBI, claimed the money laundering conspiracy involved at least 75 real estate properties, six high-end vehicles, cryptocurrency wallets, and thousands of cryptocurrency mining equipment.
