Estonia Arrests 575 Million in Alleged Cryptocurrency Scammers

Estonia Arrests $575 Million in Alleged Cryptocurrency Scammers

The Estonian Criminal Investigation Department along with the FBI have two suspects in cryptocurrency fraud and money laundering of 575 million station wagons and luxury cars.

    Image Source: Tamim Tarin /

Image Source: Tamim Tarin /

The defendants are reportedly facing 18 counts, including conspiracy to commit fraud, wireline fraud and money laundering. Each faces up to 20 years in prison.

“The size and scale of the alleged fraud scheme is truly astounding. The defendants used the allure of cryptocurrencies and the anonymity of the mining industry to pull off a Ponzi scheme.”— said US Prosecutor Nick Brown (Nick Brown).

Keep in mind that the so-called “Ponzi scheme” assumes the absence of a real business generating revenue while subsequent investors’ funds are paid out to previous investors. This business option also implies the presence of intentional fraud, which makes the system different from the usual unsustainable business.

According to court documents, the defendants used a complex scheme that began with a bogus deal with the launch of HashCoins in 2013. This Estonia-based company has allegedly manufactured and sold bitcoin and other cryptocurrency mining devices around the world. At the same time, customers were charged full prepayment at the time of ordering. In fact, HashCoins resold devices from other manufacturers, but never produced anything and could not deliver the declared devices to customers.

In 2015, scammers promised customers a percentage of the profits from a new HashFlare mining company that allegedly used HashCoins devices to reassure customers and avoid having to give their money back. Law enforcement officials found that HashFlare was also used to acquire new customers, which allowed the scammers to pay out some previous customers. Ultimately, Potapenko and Turygin, along with several others, embezzled more than $550 million in client funds.

In 2017, the attackers created the cryptocurrency bank Polybius Bank, which was intended to be funded through an ICO (a format for attracting investments by selling a fixed number of new units of cryptocurrencies obtained through one-off or accelerated generation). The company even issued a press release talking about raising $6 million through an ICO.

Court documents show the program has attracted at least $25 million in investment. After that, the scammers spent the victims’ funds “through a tangled web of front companies, bank accounts, digital asset service providers and virtual currency wallets”and used fake contracts, bills, and bank documents to hide illegally obtained funds.

About the author

Robbie Elmers

Robbie Elmers is a staff writer for Tech News Space, covering software, applications and services.

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