Two Estonian nationals, Sergei Potapenko and Ivan Turõgin, each 39, going through a number of felony prices associated to their alleged roles in an enormous cryptocurrency fraud made their first look in court docket yesterday, in response to a press launch from the Division of Justice (DOJ).
Potapenko and Turõgin have been arrested in Tallinn, Estonia in November 2022, following an 18-count indictment by the Western District of Washington. The indictment alleges that from 2015 to 2019, the defendants operated a fraudulent cryptocurrency mining service, HashFlare.
Via the enterprise, the pair allegedly lured tons of of hundreds of victims to buy contracts value over $550 million. These contracts allegedly promised clients shares of digital forex mined by HashFlare’s supposed intensive mining operations.
Nonetheless, the DOJ claims that HashFlare had minimal mining capability and engaged in lower than 1% of the Bitcoin mining it marketed. When buyers tried withdraw their purported mining earnings, Potapenko and Turõgin both resisted funds or used digital forex purchased on the open market, slightly than mined as promised.
In one other scheme in Could 2017, Potapenko and Turõgin raised at the very least $25 million via investments in Polybius, an organization they claimed would kind a digital forex financial institution. Regardless of guarantees of dividends from Polybius’ earnings, the financial institution was by no means established, and most funds have been allegedly diverted to accounts managed by the defendants.
The DOJ additionally alleges that the defendants laundered the proceeds via shell corporations, phony contracts, and invoices, utilizing the funds to accumulate 75 actual property properties, six luxurious automobiles, cryptocurrency wallets, and hundreds of cryptocurrency mining machines.
The fees in opposition to Potapenko and Turõgin embody conspiracy to commit wire fraud, 16 counts of wire fraud, and one depend of conspiracy to commit cash laundering. Every cost carries a most penalty of 20 years in jail.
Edited by Stacy Elliott.
Editor’s word: This text was written with the help of AI. Edited and fact-checked by Stacy Elliott.