2 Estonian Citizens, Sergei Potapenko and Ivan Turogin Arrested for $575 million Cryptocurrency Fraud and Money Laundering Scheme
Sergei Potapenko and Ivan Turogin were arrested for their cryptocurrency fraud and money laundering schemes Hashflare and Polybius Bank.
With the rise of technology, there has been an opening for many people to conduct businesses leading to admirable growth. However, it has also been an opportunity for fraudsters to take advantage of many individuals worldwide.
The case of Hashflare is no different; two Estonian citizens, Sergei Potapenko and Ivan Turogin, were recently arrested after defrauding hundreds of thousands in a cryptocurrency scheme.
Victims were lured by being urged to invest in Polybius Bank; a virtual currency bank contracted to a cryptocurrency mining service under Hashflare.
Thousands of victims channeled their money to the companies whereby the Polybius Bank was never an actual bank; thus, Potapenko and Turogin laundered money received.
According to assistant attorney general Kenneth A. Polite, Jr, the department was actively involved in the arrest of the tow to prevent potential victims from the public into falling for such traps.
Despite hiding traces of their fraudulent money through bank accounts, luxury properties and cars, and virtual currency wallets worldwide, the U.S. attorney Nick Brown assured that all these would be seized and assets restrained.
The scheme led to many ill-earned investments, especially in Estonia. Authorities collaborate to ensure that the properties are seized, and that news gets around to people who may have fallen victims for their tricks.
A total of $575 million was channeled to the accounts and distributed worldwide in properties, bank accounts and virtual currency.
Potapenko and Turogin stuck with the claim that Hashflare was purely involved in cryptocurrency mining and offered contracts that involved customers getting a percentage of HashFlare’s operations under a fee.
Despite having a HashFlare website where the customers would see their value of money, the indictment ruled out the contracts as fraudulent, and the scheme attracted over $550 million in four years.
Polybius Bank was never formed, and thus no dividends were paid. Thus, Potapenko and Turogin are charged with 16 counts of wire fraud, conspiracy to commit money laundering and wire fraud. If convicted, they both face a penalty of 20 years in prison.
The investigation continues as the FBI, Cybercrime Bureau of the National Crime Police of the Estonian Police and Border Guard, and the U.S. Department of Justice’s Office of International Affairs work together to assist the investigation effectively.
All individuals who may have been victims of the case are urged to visit FBI.gov for more information.