Two Arrested For $575m Crypto Fraud

Fraud in the cryptocurrency sector has persisted despite the volatility seen across the crypto industry this year. On Monday, Estonian police arrested two men accused of being involved in a $575 million cryptocurrency fraud.

Estonian police arrest two in $575M cryptocurrency fraud

An indictment unsealed in the US District Court in Seattle has charged two Estonian citizens with wire fraud and the conspiracy to engage in money laundering. The accused are 37-year-old Estonian citizens known as Ivan Turogin and Sergei Potapenko.

The charges included four other people based in Belarus, Estonia, and Switzerland. However, the identities of the four other people implicated in the fraud matter have not been released.

According to the prosecutors, the suspects tricked hundreds of thousands of people between 2015 and 2019. These individuals tricked unsuspecting people into buying contracts for HashFlare, a cryptocurrency mining service. They also lured people into investing in a digital currency bank known as Polybius Bank.

However, unlike what the prosecutors promoted to their clients, these businesses conducted pyramid schemes where the money from new investors was used to pay the profits of early investors.

These individuals are also being accused of laundering the proceeds of the fraud case using shell companies. They also used the money to buy real estate property and luxury cars. The two named accused currently being held in custody in Estonia. According to the US Justice Department, the two are waiting to be extradited to the US.

The US Attorney for the state of Seattle, Nick Brown, released a statement saying, “These defendants capitalized on both the allure of cryptocurrency and the mystery surrounding cryptocurrency mining to commit an enormous Ponzi scheme.”

According to Brown, authorities based in the US and Estonia are currently working on confiscating property and bank accounts owned by the defendants. The court records in Seattle have not indicated whether the two accused have already secured attorneys to represent them on the matter. According to authorities, some of these victims were based in the Western Washington state.

The cryptocurrency sector has reported increased volatility and turmoil during the year. This also includes a notable drop in Bitcoin and Ether prices, with the two largest cryptos losing nearly two-thirds of their value in the past year.

More crypto investors count losses after FTX collapse

While fraud in the crypto space is rampant, crypto investors also seem to lose money on legitimate platforms. FTX, once one of the largest cryptocurrency exchanges, filed for bankruptcy on November 11. The bankruptcy filing revealed that the company was mismanaged.

It is reported that FTX owes more than $3 billion to its top 50 creditors. Before filing for bankruptcy, FTX has already halted withdrawals, locking customer funds on the platform. Genesis and BlockFi have also halted withdrawals citing the ongoing market conditions.

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