Estonian nationals Sergei Potapenko and Ivan Turõgin are set to appear in a U.S. court after being extradited from Estonia. They face charges related to a large cryptocurrency Ponzi scheme involving their company, HashFlare. The indictment claims they deceived hundreds of thousands of victims, convincing them to invest in contracts for virtual currency mining services that HashFlare did not actually provide. Instead, the company engaged in minimal mining activities and used investors’ funds to buy virtual currency on the open market to make payments.
The indictment also reveals that Potapenko and Turõgin fraudulently promoted a separate investment opportunity in a company called Polybius, claiming it would create a virtual currency bank. Despite raising at least $25 million, Polybius never materialized, and the funds were diverted, with significant amounts originating from HashFlare. The defendants are accused of misappropriating these funds for personal luxuries and laundering through shell companies.
Overall, victims reportedly lost over $575 million to the schemes operated by Potapenko and Turõgin. The funds were laundered through various means, including shell companies, fake contracts, and investments in real estate and luxury vehicles. The indictment includes charges of wire fraud and money laundering, with each defendant facing up to 20 years in prison per count if convicted.
The investigation and extradition efforts involved significant international collaboration, with support from the Cybercrime Bureau of the Estonian Police, the U.S. Justice Department’s Office of International Affairs, and other U.S. agencies. The case highlights the ongoing challenges and complexities in combating large-scale cryptocurrency fraud and financial crimes.
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