Estonian Police Arrests Two Scammers In $575 Million Scheme

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The crypto industry has seen massive growth in recent years. And since the mainstream adoption accelerated, cybercriminals and scammers also ramped up their efforts to deceive innocent users in crypto. As a result, the global law enforcement sector also turned on its toes to combat bad actors laundering money.

This time, Estonia Police made headlines by arresting two crypto fraudsters defrauding investors of $575 million. The defendants, Ivan Turõgin and Sergei Potapenko, both are aged 37 years. They faked running a cryptocurrency mining platform, HashFlare, and a digital assets bank named Polybius Bank where victims invested both crypto and fiat currencies. 

A district court in Seattle set charges against the defendants including 16 indictments of wire fraud and one for money laundering using fake companies. Additionally, investigations uncovered that this crypto scam also involves four other conspirators living in Belarus, Switzerland, and Estonia. Fraudsters received illegal crypto funds from hundreds of thousands of users and operated fake business models from 2015 to 2019; officials affirmed that the company acted as a pyramid scheme. 

Bitcoin is currently trading at above $16,500. | Source: BTCUSD price chart from TradingView.com

U.S. Authorities Continue To Take Scammers Down

Per the report, the arrest of the fraudsters resulted from a joint search by over 100 Estonian police officers and around 15 FBI agents. According to the U.S. Department of Justice (DOJ), the scammers used stolen funds to purchase real estate and luxury cars and used shell companies to launder money. 

Speaking on the incident, Nick Brown, a U.S. Attorney for Western District Court, added;

The size and scope of the alleged scheme is truly astounding. These defendants capitalized on both the allure of cryptocurrency, and the mystery surrounding cryptocurrency mining, to commit an enormous Ponzi scheme. They lured investors with false representations and then paid early investors off with money from those who invested later. They tried to hide their ill-gotten gain in Estonian properties, luxury cars, and bank accounts and virtual currency wallets around the world. U.S. and Estonian authorities are working to seize and restrain these assets and take the profit out of these crimes.

Prosecutors say the criminals, now in custody, could face jail terms of up to 20 years. A federal district court will sentence defendants considering the U.S. Sentencing Guideline after they confess committed crimes.

U.S DOJ Confiscated More Than 50,000 Bitcoins Last Year

The U.S. DOJ recorded the historic seizure of over 50,000 Bitcoins in the same month last year. At the time of confiscation, Bitcoin was trading at a high price of around $68,000, meaning the confiscated crypto stash was worth over $3.3 billion. James Zhong, from whom the BTC was seized, allegedly committed scams on the darknet marketplace Silk Road. 

The U.S. attorney of Southern District Court, Damian Williams, commented at the time;

James Zhong committed wire fraud over a decade ago when he stole approximately 50,000 Bitcoin from Silk Road. For almost ten years, the whereabouts of this massive chunk of missing Bitcoin had ballooned into an over $3.3 billion mystery.

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