Six Suspects Charged After Chicago Family Kidnapped for Crypto

So far, only one suspect has been arrested, while the others are believed to have fled to China. Meanwhile, CluCoin founder Austin Michael Taylor, who misappropriated $1.1 million in investor funds for online gambling, is asking for probation. Prosecutors, however, are pushing for a 27-month prison sentence. HashFlare co-founders Sergei Potapenko and Ivan Turogin also recently pleaded guilty to wire fraud after defrauding users out of $550 million in a mining scam. They now face up to 20 years in prison when they get sentenced in May.

Six Men Charged in Chicago Crypto Kidnapping Case

Six men have been charged in connection with the kidnapping of a family of three and their nanny in Chicago, where they allegedly forced the victims to transfer $15 million worth of cryptocurrencies. According to a recently unsealed FBI affidavit, the kidnappers gained entry to the family’s townhouse by pretending to have damaged their garage door. Once inside, they held the family at gunpoint before taking them to an Airbnb rental an hour away, where they spent one night. They were then moved to another house the next day.

Suspect entering the Airbnb (Source: Chicago Tribune)

During their captivity, the kidnappers allegedly demanded ransom payments in Bitcoin, Ethereum, and other cryptocurrencies. They also threatened to kill the victims if they did not comply. The victims were reportedly held for five days before one of them managed to contact his father on WeChat and alerted him to the situation. Eventually, they were released on Nov. 1 and managed to make their way to a nearby dry cleaner before calling an Uber to a local hospital. While it was said that about $15 million worth of crypto was transferred, authorities have so far only accounted for $6 million.

The six suspects were charged on Dec. 13, and only one of them, 34-year-old Zehuan Wei, was arrested as he tried to re-enter the United States from Mexico on Jan. 17. The remaining suspects, Fan Zhang, Huajing Yan, Shengnan Jiang, Shiqiang Lian, and Ye Cao, are believed to have fled to China after Wei’s arrest.

Before filing charges, US authorities gathered evidence by analyzing the surveillance footage from the Airbnb, examining cryptocurrency wallets, and searching the contents of a white Ford van linked to the case. DNA swabs were also collected from a white Chrysler Pacifica that Wei rented on Oct. 29. Officials compared images of the suspects against customs photos and state-issued driver’s licenses, and at least two of the victims were able to identify some of the alleged kidnappers in a photo lineup.

Prosecutors Push for Prison in CluCoin Fraud Case

The law is not only chasing kidnappers. Austin Michael Taylor, the founder of the crypto scheme CluCoin, asked a Miami federal court to spare him from prison after pleading guilty to wire fraud last year for misappropriating $1.1 million in investor funds to gamble in online casinos. In a sentencing memo that was filed on Feb. 11, Taylor requested probation, which will allow him to serve his sentence outside of prison. Prosecutors, however, pushed for a 27-month prison term after arguing that a custodial sentence is necessary to deter future cryptocurrency fraud.

Taylor’s legal team stated that he took full responsibility for his actions, and completed an in-hospital mental health treatment program. He also continues to receive care while attending Gamblers Anonymous meetings. 

He pleaded guilty in August to wire fraud related to his CluCoin project, which launched in May of 2021. The initiative initially involved the creation of the CLU token, followed by the minting of NFTs and promises of developing a computer game and metaverse platform. By May of 2022, Taylor was able to withdraw investor funds from project wallets and lost approximately $1.14 million in cryptocurrency through online gambling between then and December 2022.

Austin Michael Taylor

At the time of his guilty plea, the FBI announced it will notify victims of potential restitution through NFTs, which made it one of the first instances of law enforcement using digital assets to contact fraud victims. Taylor’s sentencing memo claimed he maintained stable employment and was prepared to make an initial $25,000 payment toward victim restitution. He also stated that he could provide “additional large payments” if granted probation.

Taylor also asked the court to consider his 15 years of military-related service after a probation officer mentioned that this could be relevant in determining whether a downward departure from sentencing guidelines was warranted. Despite this, prosecutors insisted that prison time was necessary to discourage the growing trend of fraudulent cryptocurrency schemes.

Taylor’s sentencing hearing is scheduled for Feb. 14, where the court will decide whether he will serve time in prison or be granted probation.

HashFlare Founders Plead Guilty to Crypto Fraud

The co-founders of crypto mining service HashFlare, Sergei Potapenko and Ivan Turogin, also recently pleaded guilty to conspiracy to commit wire fraud as part of a deal with US authorities. In hearings that were held on Feb. 12 in the US District Court for the Western District of Washington, the Estonian nationals admitted to one felony count out of the 18 charges they originally faced. The two were accused of running HashFlare, which was a fraudulent operation that defrauded users out of more than $550 million between 2015 and 2019, as well as raising $25 million in 2017 under the pretense of launching a digital bank called Polybius, which was never created.

After the plea, defense counsel Mark Bini stated that the defendants agreed to forfeit their interests in assets that were frozen by the government in 2022 and were cooperating to make sure there will be no financial harm to victims. According to the attorney, HashFlare returned $350 million in crypto payments to users between 2015 and 2022. 

The company stopped its operations in 2019, and Potapenko and Turogin were arrested in Estonia in 2022. After fighting legal challenges, they were extradited to the US in May of 2024 and have been free on bail since July. Both could face up to 20 years in prison when they appear for sentencing on May 8.

The indictment accused Potapenko and Turogin of misleading HashFlare users about the company’s mining capabilities, allegedly operating at only 1% of the capacity they had claimed. Turogin’s attorney, Andrey Spektor, stated that the defense plans to argue at sentencing that no customers actually suffered financial harm, maintaining that while HashFlare did mine cryptocurrency, it failed to do so at the levels that were promised.

The case is being handled in the same jurisdiction where former Binance CEO Changpeng Zhao pleaded guilty to a felony count as part of a settlement with US authorities. Zhao served a four-month prison sentence in 2024 and stayed involved in the crypto industry since his release.