US: 2 Estonians Arrested in $575M Cryptocurrency Fraud

Sergei Potapenko and Ivan Turogin, both 37 years old, were charged in an unrestricted indictment in U.S. District Court in Seattle with conspiracy to commit money laundering and wire fraud. They collaborated with four unidentified co-conspirators who resided in Switzerland, Estonia, and Belarus, according to the criminal documents.

Authorities claim that between 2015 and 2019, the suspects deceived a large number of people into purchasing contracts for a cryptocurrency mining service called HashFlare and making investments in a virtual currency bank called Polybius Bank. Prosecutors said that the enterprises actually functioned as pyramid scams.

In a news release, U.S. Attorney Nick Brown of Seattle stated that the defendants "capitalised on both the allure of cryptocurrencies, and the mystery surrounding cryptocurrency mining, to execute an immense Ponzi scheme."

According to Brown, Estonian and American officials are attempting to seize the defendants' possessions and bank accounts.

No information about the men's legal representation was found in Seattle court records. Authorities reported that some of the victims were in Western Washington state.

This year has not been without its share of volatility and unrest in the cryptocurrency sector, including a precipitous drop in the price of bitcoin and other digital assets. The third-largest cryptocurrency exchange, FTX, failed earlier this month as a result of the digital currency equivalent of a bank run. Some people have compared the current situation to Wall Street firms failing during the 2008 financial crisis, especially in light of the failure of FTX and other ostensibly healthy companies.