FBI arrests two Estonian men in $575M crypto fraud, money laundering scheme
Potapenko and Turõgin each face a maximum penalty of 20 years in prison
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The FBI and Estonian police arrested two Estonian citizens Sunday for their alleged involvement in a $575 million cryptocurrency fraud scheme.
Sergei Potapenko and Ivan Turõgin, both 37, are charged with conspiracy to commit wire fraud, 16 counts of wire fraud, and one count of conspiracy to commit money laundering.
Cryptocurrency prices were edging higher early Tuesday morning with Ethereum topping the $3,000 mark for the first time in two weeks. (Reuters/Dado Ruvic/Illustration / Reuters)
Prosecutors say the men persuaded victims to enter into fraudulent equipment rental contracts with the defendants’ cryptocurrency mining service, HashFlare. They also caused victims to invest in a phony virtual currency bank called Polybius Bank, which never paid out dividends.
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The indictment charges Potapenko and Turõgin with conspiring to launder their criminal proceeds by using shell companies, phony contracts, and invoices. The money laundering conspiracy allegedly involved at least 75 real properties, six luxury vehicles, cryptocurrency wallets, and thousands of cryptocurrency mining machines.
Cryptocurrency mixing platform, Tornado Cash, has been hit with US sanctions over allegations of money laundering. Cryptocurrency Illustration picture taken on Jan. 24, 2022. (Reuters/Dado Ruvic/Illustration / Reuters)
"The size and scope of the alleged scheme is truly astounding," said Assistant Attorney General Kenneth Polite Jr. of the Justice Department's criminal division. "U.S. and Estonian authorities are working to seize and restrain these assets and take the profit out of these crimes."
The FBI is investigating the case.
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If convicted, Potapenko and Turõgin each face a maximum penalty of 20 years in prison.
A federal district court judge will determine any sentence after considering U.S. Sentencing Guidelines and other statutory factors.