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Two men arrested in Estonia over $575 million cryptocurrency laundering scheme


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The digital cryptocurrency Bitcoin has just hit a two-year low.Chesnot/Getty Images

  • Estonian police have arrested two men accused of running a $575 million crypto money laundering scam.

  • The duo allegedly defrauded hundreds of thousands of investors and used the money to buy luxuries.

  • The criminal indictment comes as Bitcoin has just hit a two-year low and crypto scams abound.

Estonian police have arrested two 37-year-old men on charges of running a $575 million crypto money laundering scam. The Estonian citizens face multiple criminal charges including fraud and conspiracy to commit money laundering, and are being held in the Estonian capital pending extradition to the United States, according to a Department of Justice (DOJ) statement released Monday.

Sergei Potapenko and Ivan Turõgin are accused of luring hundreds of thousands of people around the world to invest in their alleged bitcoin mining service HashFlare from 2015 to 2019, according to the statement. The two men allegedly funneled the money through shell companies and spent it on “real estate and luxury cars,” according to the statement.

They are also accused of defrauding $25 million in money from investors in a “virtual currency” bank called Polybius that they said they created, even though they allegedly never created the bank or paid dividends to said investors.

The DOJ statement states that HashFlare did not have the cryptocurrency mining equipment it claimed and was mining Bitcoin “at a rate of less than one percent” of its alleged computing power.

“The size and scope of the alleged scheme is truly staggering,” U.S. Attorney Nick Brown of the Western District of Washington said of the scam, the Justice Department statement said. “These defendants capitalized on both the allure of cryptocurrency and the mystery surrounding cryptocurrency mining to commit a massive Ponzi scheme”

The criminal indictment comes at a difficult time for cryptocurrencies and virtual currencies, when the industry has experienced a dramatic downturn and scams are rife. Earlier this year, dozens of investors lost thousands of dollars when the huge algorithmic stablecoin TerraUSD suddenly crashed. Bitcoin plunged to a two-year low this week as the market grappled with the explosive collapse of FTX, the world’s second-largest cryptocurrency exchange that recently filed for bankruptcy after its founder secretly transferred $10,000. million in client funds to an affiliated company. .

Read the original article on Insider

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